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CALIFORNIA 


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m;,  ;     ■(  CF  CALiFOKN'.A,  SAN  DIEGO 
LA  JOLLA.  CALIFORNIA 


The  Essential  Elements 


MONETARY  SYSTEM 


ADDRESS  BEFORE  THE  WORLD'S  CONGRESS 

OF  BANKERS   AND   FINANCIERS, 

CHICAGO,  JUNE,   1893. 


By   R.   M.  WIDNEY, 

President  University  Bank  of  Los  Angeles,  Cal. 


CHICAGO : 
RAND,   McNALLY  &  CO. 

1S93. 


He- 

5-2P} 

AlC 


PREFACE. 

SINCE  the  accompanying-  address  was  prepared,  financial 
events  have  rapidly  evolved.  The  effect  of  the  panic 
and  stringency  have  demonstrated  the  insufficient  sup- 
ply of  money. 

The  closed  industries  and  the  tramping  tens  of  thousands 
of  unemployed  seeking  labor  or  food,  forecast  a  great  danger 
to  the  country. 

The  laborer  has  nothing  to  sell  but  his  labor,  and  the  mar- 
ket for  that  is  destroyed.  No  law  requires  him  to  starve.  The 
consequence  is  apparent. 

The  remedy  lies  exclusively  in  the  hands  of  Congress.  And 
Congress  alone  is  responsible  for  the  consequences. 

Had  proper  financial  legislation  been  enacted  in  1891  or 
1892  the  past  damages  would  have  been  averted,  and  to-day 
the  nation  would  be  in  the  midst  of  prosperity. 

The  conditions  will  grow  worse  until  our  financial  system  is 
reduced  to  a  scientific  system  worthy  of  the  intelligence  of  our 
nation. 

If  our  political  parties  will  for  a  time  stop  trying  to  give 
each  other  a  "  black  eye,"  and  unite  in  a  patriotic  effort  to  ben- 
efit the  people,  by  the  best  and  speediest  legislation  possible, 
they  will  succeed  in  solving  the  problem  and  in  hastening  the 
day  of  national  prosperity. 

November  3,  1893. 


I 


THE   ESSENTIAL    ELEMENTS   OF   A  MONETARY 

SYSTEM. 

By  Judge  R.  M.  Widney,  Los  Angeles,  Cal. 

THE  essential  elements  of  a  monetary  system,  as  con- 
ceded by  text-books  and  writers,  are  money  volume, 
safety,  elasticity,  convertibility,  uniformity,  and  cir- 
culation ;  but  the  essential  principle  underlying  all  of  these 
is  that  the  monetary  system  must  not  omit  any  one  of  them, 
and  must  have  each  as  nearly  perfect  as  possible.  It  is  use- 
less to  discuss  which  wheel  of  a  watch  is  essential,  for  if 
you  omit  any  one  it  don't  go,  and  if  you  have  an  imperfect 
wheel  the  watch  is  practically  worthless.  Assuming  the 
.above  elements  to  be  essential,  I  shall  more  particularly 
■discuss  the  essential  factors  of  these  elements  and  show 
how  they  may  be  combined  to  produce  the  best  system.  It 
must  be  borne  in  mind  that  our  population  is  increasing, 
our  commerce  is  expanding,  our  industries  are  growing,  and 
the  vision  of  the  future  is  more  brilliant  than  the  facts  of 
the  present.  The  future  can  no  more  be  attained,  or  main- 
tained, on  present  facts  and  conditions  than  the  present 
_growth  could  be  attained,  or  maintained,  on  the  facts  of  the 
■colonial  days.  We  have  outgrown  the  furnishings  of  the 
past,  and  the  future  can  not  be  provided  for  by  our  present 
worn-out  financial  garments  and  appliances. 

Writers  generally  concede  that  money  as  a  mechanism  of 
■exchange  is  one  of  the  absolutely  essential  factors  of 
civilization.  It  is  no  exception  to  the  foregoing  truths,  and 
the  present  and  future  volume  and  methods  of  circulation 
can  not  be  adequately  met  by,  and  must  not  be  limited  to, 
past  methods  and  supplies.  "  Either  our  volume  of  money 
must  be  increased  to  meet  the  wants  of  our  growing  countrv. 

f5) 


or  the  business  of  the  country  must  be  periodically  killed 
off  until  it  is  within  the  compass  of  our  circulation."  There- 
fore there  opens  up  before  us,  there  is  presented  to  us,  and 
there  is  forced  upon  us,  and  not  only  upon  us  but  upon  each 
nation,  the  proper  solution  of  the  financial  question  for  the 
present  and  future  users  of  money.  The  essential  elements 
of  a  monetary  system  must  be  ascertained.  The  various 
systems  must  be  analyzed,  and  from  the  analysis  we 
must  eliminate  the  non-essentials,  and  from  the  essentials 
there  must  be  constructed  a  system  for  international  and 
domestic  use  that  will  be  free  from  unnecessary  friction  or 
dislocation.  It  should  possess  as  many  reciprocating  and 
automatic  adjustments  as  the  uses  of  the  age  demand.  In 
fact  it  should  stand  in  finances  as  electrical  perfection 
stands  to-day  among  the  sciences. 

The  use  for  money  is  domestic  and  international.  A 
government  is  a  joint  contract  entered  into  by  the  people 
for  their  mutual  benefit,  and  the  laws  enacted  are  simply 
the  legal  evidence  of  the  terms  and  conditions  of  the  con- 
tract. Hence  each  nation  can  create  and  control  its 
domestic  money  relations,  and  can  also  dictate  what  it  will 
accept  as  money  from  other  nations.  But  there  is  no  inter- 
national money  agreement  or  compact  between  nations  as 
to  what  shall  be  used  as  money.  Hence  no  nation  can  force 
other  nations  to  accept  any  particular  article  as  money.  In 
fact  payment  in  each  nation  can  only  be  forced  by  using  the 
legal-tender  money  of  that  particular  nation. 

The  inconvenience  of  having  no  legal  international 
money  has  led  the  merchants  of  the  different  nations  ta 
adopt,  by  common  consent,  gold  and  silver  bullion  as  the 
articles  for  the  settlement  of  international  accounts ;  but 
if  the  creditor  should  refuse  to  accept  either  the  gold  or 
silver  bullion,  the  debtor  would  have  to  sell  it  at  its  com- 
mercial value  for  legal-tender  money  of  the  creditor  nation 
and  pay  him  with  that  legal-tender.  If,  therefore,  in  con- 
sidering the  essential  elements  of  a  monetary  system  we 
shall  bear  in  mind  that  we  have  no  power  over  the  inter- 


national  money  system,  and  that  our  work  must  be  limited 
to  the  domestic  system,  it  will  materially  aid  in  clearly 
understanding  what  is  essential  and  what  is  not  essential. 

INTERNATIONAL   CLEARING   HOUSE. 

Before,  however,  dismissing  the  international  questions  I 
would  suggest  that  great  commercial  benefits  would  arise 
from  the  establishment  of  an  international  clearing  house, 
thus  avoiding  all  handling  and  risk  of  transshipment  except 
of  final  balances.  This  could  be  readily  accomplished  by 
each  nation  designating  its  treasury  or  any  other  place,  on 
the  responsibility  of  that  nation,  as  the  place  of  deposit  for 
balances.  Owing  to  the  large  amount  of  these  balances 
merchants  would  not  feel  safe  with  less  than  a  national 
responsibility  for  the  money.  The  banks  in  each  nation 
having  international  accounts  of  debit  or  credit  could  clear 
in  their  local  clearing  houses,  and  deposit  in  the  national 
treasury  gold  for  the  balance.  These  national  treasuries 
would  in  like  manner  clear,  and  the  final  balance  could  be 
shipped  to  the  creditor  treasury  for  payment  to  local  banks 
to  which  it  belonged,  or  the  balances  could  be  held  subject 
to  the  order  of  the  creditor  treasury  for  future  balances  or 
for  future  shipment  on  demand.  vSuch  a  system  would 
make  the  volume  of  money  in  the  world  much  more  efficient, 
and  would  eventually  lead  to  an  international  money  system 
for  the  common  good. 

In  the  appendix  to  this  address  is  a  suggested  form  of  a 
bill  for  Congress  including  this  subject,  vesting  in  the  Sec- 
retary of  the  Treasury,  with  the  approval  of  the  President, 
the  power  to  establish,  in  co-operation  with  other  nations, 
such  a  clearing-house  system.  It  should  receive  such 
amendments  and  changes  as  will  add  to  its  efficiency  and 
safety.  [See  proposed  bill.  Sec.  5.]  While  the  international 
system  of  clearing  will  give  great  relief  in  finances  from 
the  present  crude  and  cumbersome  method,  it  will  not  solve 
the  question  as  to  what  shall  be  used  as  domestic  money, 


8 

nor  how  it  shall  be  issued,  or  circulated,  or  what  the  volume 
shall  be.  As  the  citizens  of  each  nation  will  have  to  settle 
this  as  their  local  interests  require,  I  shall  confine  ray- 
further  remarks  on  the  subject  to  the  financial  needs  of 
this  nation,  leaving  the  representatives  of  other  nations  to 
discuss  the  efficiency  of  their  local  finances. 

IN   THE   UNITED   STATES   OF  AMERICA. 

It  will  probably  be  conceded  without  argument  that 
business  demands  the  best  money  and  the  best  system  for 
readily  placing  money  at  the  point  of  use.  The  closest 
approximation  to  these  will  give  us  the  essential  elements  of 
a  monetary  system.  Money  is  that  which  will  at  all  times 
and  under  all  circumstances  perform  the  functions  of 
money.  In  fact,  that  which  will  not  so  perform  every 
money  function  is  not  money.  The  current  definitions  of 
money  are  open  to  objections  as  either  including  non-essen- 
tial elements  or  excluding  that  which  is  essential.  I  offer 
the  following  as  a  definition  that  is  correct  in  law  and  in 
fact :  "  Money  is  that  article  in  a  nation  with  which  a  debtor 
can  extinguish  his  debt  without  the  consent  of  the  creditor 
at  a  fixed  unit  of  value."  In  other  words,  it  must  be  a  legal 
tender  by  the  supreme  law  of  the  land  in  the  extinguish- 
ment of  debts  within  the  jurisdiction  of  the  law.  Anything 
not  possessing  the  legal-tender  element  above  is  only  an 
article  of  merchandise.  Hence  gold  or  silver,  copper  or 
nickel,  however  fine,  whatever  their  form  or  device,  without 
the  statuary  y?^/  are  not  money  and  are  articles  of  commerce 
alone.  And  gold  or  silver,  having  the  nation's  legislative 
fiat  stamped  upon  them,  cease  to  be  money  as  soon  as  they 
pass  out  of  the  jurisdiction  of  the  laws,  or  when  the  Gov- 
ernment becomes  unable  to  enforce  its  fiat.  The  gold  or 
silver  coins  of  England,  Germany,  or  France,  or  of  the 
United  States  are  not  money  in  a  foreign  nation,  but  are 
only  received  as  bullion,  at  its  commercial  value,  and  even 
then  can  only  pass  by  consent  of  the  one  receiving  it.    This 


k 


definition  of  money  not  only  excludes  gold  and  silver 
bullion,  but  also  all  checks,  drafts,  clearing-house  certifi- 
•cates,  State  bank  notes,  or  any  other  order  fc^r  legal-tender 
money.  In  fact,  they  are  only  legal  contracts  or  obligations 
for  the  payment  of  legal-tender  money,  and  the  one  signing 
them  in  final  settlement  must  obtain  "  legal-tender  money" 
with  which  to  extinguish  the  contract.  Private  individuals, 
•corporations,  or  vStates  can  not  issue  money.  They  can 
•only  contract  to  pay  money.  Only  the  concurrent  agree- 
ment of  our  sixty-six  million  people  expressed  in  an  act  of 
'Congress  makes  an  article  money  for  domestic  use.  The 
statutory  words,  "  This  shall  be  a  legal  tender  in  satisfac- 
tion of  all  obligations  for  the  payment  of  money  within  the 
jurisdiction  of  the  United  States,"  and  impressed  on  gold, 
.silver,  copper,  nickel,  or  paper,  invests  them  with  full  money 
functions  and  constitutes  them  money.  It  therefore  appears 
that  this  money  function  is  purely  a  creation  of  statutory 
■enactment,  and  with  it  an  article  is  money,  without  it  the 
.article  is  not  money.  Silver  was  demonetized.  What  does 
that  mean  ?  Why,  that  the  money  function  given  by  statu- 
tory enactment  was  removed  from  silver  and  it  ceased  to  be 
money.  Therefore,  we  conclude  that  the  essential  element 
•of  money  is  its  power  to  extinguish  a  debt  at  the  will  of 
the  debtor,  without  the  consent  of  the  creditor,  at  a  fixed  unit 
■of  value. 

For  the  purposes  of  this  address  the  financial  transactions 
of  the  world  may  be  divided  into  two  classes,  in  one  of 
which  the  transactions  may  be  satisfactorily  consummated 
without  the  use  of  money;  the  other  can  only  be  closed 
up  by  the  use  of  that  which  is  legal-tender  money.  In  the 
first  are  embraced  all  cases  where  checks,  drafts,  clearing- 
house certificates,  and  other  non-legal-tender  orders  for 
money  are  accepted  by  the  creditor,  he  taking  his  chances 
on  finally  getting  legal-tender  money.  This  class  represents 
about  eighty-five  per  cent  of  business  transactions  with 
safety  and  financial  ease.  When  it  reaches  ninety  per  cent 
there  is  a  perceptible  inconvenience  and  tightness  in  the 


10 

money  market,  many  finding  accommodations  difficult; 
the  financial  reports  stating  that  "  the  demand  for  money 
is  quite  brisk  and  ruling  at  higher  rates  of  interest,"  and 
that  selling  on  the  stock  market  is  active  with  the  bear 
influence  predominating.  As  the  percentage  of  credit 
transactions  advances  beyond  ninety  per  cent  the  dan- 
ger rapidly  increases,  with  more  failures  and  general  evi- 
dences of  distress,  and  terminates  in  a  crisis  and  a  panic  at 
ninety-five  per  cent.  As  money  is  not  required  in  the  above 
transactions  they  may  be  dismissed  from  the  discussion  of 
the  subject.  It  is  the  remaining  percentage  of  business, 
the  final  liquidation  of  all  the  credits,  that  requires  and  can 
only  be  closed  up  by  the  use  of  legal-tender  money.  Inter- 
nationally the  people  by  common  consent  use  gold  to  settle 
the  final  credit  obligations.  By  a  like  common  consent, 
expressed  in  the  form  of  an  act  of  Congress,  the  people  of  the 
United  States  use  gold,  silver,  copper,  nickel,  and  paper  legal 
tender  to  settle  the  final  credits  between  individuals,  leaving 
really  in  its  place  a  general  credit  obligation  from  the  sixty- 
six  millions  of  people  to  the  individual  creditor.  Gold  has  a 
commercial  value  based  upon  its  supposed  cost  of  production 
representing  say  twenty-three  and  twenty-two  one-hun- 
dredths  grains  of  fine  gold  for  a  dollar  in  labor.  When  that 
weight  of  gold  is  impressed  with  the  money  fiat  of  the  nation, 
it  is  supposed  to  be  the  best  money,  for  the  reason  that  if  the 
fiat  of  the  nation  should  fail  the  owner  would  still  have  the 
commercial  value  left.  It  is  therefore  said  to  possess  intrin- 
sic value  ;  but  in  fact  there  is  very  little  intrinsic  value,  for  no 
one  receives  it  except  upon  the  belief  that  he  can  get  rid  of 
it  in  exchange  for  other  things.  No  one  would  accept  it  if 
he  were  forced  to  finally  keep  it.  It  is  properly  denomi- 
nated a  mechanism  of  exchange.  Any  other  article  accepted 
by  common  agreement  for  the  purpose  is  equally  valuable 
as  money  for  domestic  use.  However,  so  long  as  the  mer- 
chants of  the  different  nations  regard  gold  as  having  an 
intrinsic  value,  so  long  will  they  accept  it  as  a  money  of 
final  payment,  at  its  commercial  value  as  an  article  of  final 
payment  of  debts. 


K 


11 

NOT    ENOUGH    GOLD. 

So  long-  as  the  people  in  the  world  desire  to  aecept  gold 
as  an  article  of  commercial  value  in  payment  of  final  bal- 
ances, they  will  continue  to  do  so.  Therefore,  if  there  was 
enough  to  meet  the  business  wants  of  the  growing  civiliza- 
tion of  the  world,  no  question  would  arise  as  to  the  kind  of 
money.  But  the  total  volume  of  gold  coin  and  bullion  in 
the  world  is  only  $3,984,256,589,  a  per  capita  of  three  dollars 
and  twenty-two  cents  for  the  world's  population.  This  does 
not  equal  the  present  money  volume  of  the  United  vStates 
and  France. 

The  average  annual  production  of  gold  for  the  eight 
years  1881  to  1889  was  $108,376,258,  or  eight  cents  per 
capita.  The  annual  consumption  of  gold  in  the  industrial 
arts  is  about  $64,000,000,  a  per  capita  of  five  cents.  This 
leaves  an  annual  increase  for  money  purposes  of  only  three 
cents  per  capita.  It  will  be  conceded  at  once  that  these 
small  sums  of  stock  and  increase  never  can  either  supply  or 
keep  pace  with  the  growing  business  of  the  world. 

In  the  United  States  the  supply  May  i,  1893,  was  as 
follows : 

Gold  coin  and  bullion ..$613,042,879  per  capita  of  $9.00 

Annual   product 32,976,000    "         "  .50 

Used  in  the  arts 16,679,000    "         "  .25 

Balance  for  money  use 16,279,000    "         "  .25 

Yet  the  United  States  is  using  a  money  volume  of  about 
twenty-four  dollars  per  capita,  of  which  gold  is  only  nine 
dollars  per  capita,  and  her  closing-  banks,  her  failing  mer- 
chants, and  crashing  industries  cry  aloud  for  a  greater 
volume. 

The  present  struggle  for  gold  among  the  different 
nations  demonstrates  that  there  is  not  enough  of  it  to  do 
the  money  work  of  the  world,  both  domestic  and  inter- 
national. If  freed  from  domestic  money  use  the  gold  of  the 
world  would  about  satisfy  the  international  demand,  until 
such  time  as  the  nations  by  a  common  law  shall  adopt  some 


V2 

additional  and  other  money.  Therefore  necessity  forces 
each  nation  to  use  other  material  for  money  in  order  to 
give  a  sufficient  volume  for  its  domestic  use. 

HOW   ABOUT   THE   USE   OF   SILVER. 

The  statistics  show  that  it  is  not  of  sufficient  volume  even 
if  all  the  nations  were  to  adopt  it  for  money  use.  Its  volume 
in  the  world  is : 

Coin  and  bullion $4,512,754,655  per  capita  $3.65 

Annual  product 121,389,242    "         "  .09 

Industrial   uses 21,660,000    "         "  .02 

Annual  increase  for  money 99,729,240    "         "  .07 

Combined  with  the  former  statistics  for  gold  the  two 
represent  $144,005,506,  or  ten  cents  per  capita,  as  the  annual 
increase. 

In  the  United  vStates  the  silver  volume  of  coin  and 
bullion  is : 

Stock $687,614,551  per  capita  $10.00 

Annual  product 64,768,730     "         "  .97 

Industrial  uses 8,767,000     "         "  .85 


Annual  increase  for  money $56,001,730 

But  it  must  be  borne  in  mind  that  nearly  the  total  stock 
of  silver  in  the  United  States  is  in  money  use  either  as  coin 
or  as  certificates  issued  for  the  silver  bullion,  these  certifi- 
cates aggregating  ]\lay  I,  1893,  $326,806,504. 

The  total  stock  of  gold  and  silver  coin  and  bullion  as 
recently  held  by  the  leading  six  commercial  nations  was  as 
follows : 

England $    650,000,000  per  capita  $18.00 


France i  ,600,000,000 

Germany 645,000,000 

Russia - --  200,000,000 

Italy 200,000,000 

United   States 1,300,657,430 


43- 00 
14.00 
12.50 
6.00 
20.00 


This  leaves  about  two  dollars  per  capita  for  the  use  of  the 
other  nations  and  peoples.     Never  before  in  the  history  of 


rs 

the  world  has  the  human  race  so  generally  advanced  to 
commercial  and  civilized  growth.  Everywhere  the  unciv- 
ilized and  unsettled  continents  and  regions  are  being 
opened  up  and  developed,  and  as  this  occurs  they  draw 
coin  money  from  the  older  nations.  The  new  civilizations 
can  not  issue  a  credit  money,  for  they  have  not  yet  an 
established  community  credit.  They  are  therefore  forced 
to  use  gold  and  silver  as  money.  This  causes  gold  and 
silver  to  flow  to  such  new  communities  from  the  older 
nations,  and  will  continue  to  deplete  their  stock  until  more 
of  an  equal  distribution  is  reached.  But  silver  labors  under 
another  disadvantage.  Explain  it  as  you  may,  the  fact  still 
remains  that  silver  is  not  received  largely  as  an  article  of 
final  settlement  of  debts.  Its  commercial  value  is  such  that 
to  overcome  the  objection  of  bulkiness  it  is  necessary  for  a 
nation  to  add  a  heavy  per  cent  of  its  credit  to  the  commer- 
cial value  to  equalize  a  convenient  weight,  four  hundred 
and  twelve  and  one-half  grains  to  twenty-three  and  twenty- 
two  one-hundredths  grains  of  gold. 

FREE   COINAGE. 

It  is  urged  that  free  coinage  will  give  us  more  money  of 
final  payment.  The  power  of  ultimate  or  final  payment  of 
debt  must  be  a  commercial  value  equal  to  the  debt.  Gold  as 
a  final  payment  is  based  on  its  bullion  or  commercial  value 
and  nothing  else.  Gold  coin  of  the  United  States  when 
used  for  final  payment  out  of  our  jurisdiction  as  a  nation  is 
used  only  as  bullion  by  weight.  The  same  is  true  when 
foreign  gold  coins  are  used  in  the  United  States.  In  each 
case  the  money  power  of  the  coins,  which  is  only  the  fiat  or 
credit  of  the  nation,  ceases  to  exist  at  the  boundary-line  of 
the  nation  coining  it,  and  the  commercial  value  as  fixed  by 
the  demands  of  commerce  alone  enters  into  the  final  pay- 
ment. No  act  of  Congress  or  of  any  government  has  power 
outside  of  the  jurisdiction  of  the  nation ;  therefore  when 
gold  or  silver  coin  crosses  the  high  seas  it  goes  as  bullion  at  its 
commercial  value  alone.     According  to  the  laws  of  nature 


14 

gold,  silver,  pennies,  nickels,  or  Chinese  brass  tokens  as 
articles  of  final  payment  between  nations  must  each  alike 
lay  aside  its  garment  as  money,  and  enter  the  scales  of  com- 
merce as  naked  metal  to  be  weighed  in  the  balance,  at  the 
international  commercial  value.  Should  this  nation  put  its 
fiat  of  free  coinage  on  silver,  sixteen  to  one,  it  will  only  add 
the  credit  of  this  nation  of  sixty-six  millions  of  people  to  the 
bullion  value,  and  this  credit  value  will  not  extend  beyond 
our  jurisdiction.  When  it  goes  abroad  as  a  money  of  final 
payment,  the  nation's  fiat  dies  at  the  nation's  boundary-line 
and  it  goes  as  bullion  at  the  market  price.  This  is  true 
whether  the  money  is  gold,  silver,  copper,  nickel,  brass,  or 
iron. 

What  can  free  coinage  do  at  sixteen  to  one  ?  It  is  com- 
posed of  two  things,  the  bullion  value  of  the  silver  added  to 
the  credit  value  of  sixty-six  millions  of  people.  The  sixty- 
six  millions  own  their  credit  in  fee  simple  absolute.  It 
is  their  property  at  its  commercial  value  as  certainly  and  as 
righteously  as  the  silver  is  the  property  of  the  silver  owners 
at  its  commercial  value.  Each  thus  under  the  law  of  nature, 
being  the  owner  of  separate  properties,  neither  one  has  the 
right  to  rob  the  other.  The  sixty-six  millions  of  people  have 
no  right  to  appropriate  or  confiscate  by  act  of  Congress  the 
commercial  value  of  the  silver  from  the  silver  owners ; 
neither  have  the  silver  owners  any  right  by  act  of  Congress 
to  appropriate  or  confiscate  the  credit  or  fiat  value  of  the 
sixty-six  millions. 

The  commercial  value  of  the  silver  output  of  the  United 
States  is  about  $47,288,207  annually.  The  credit  or  fiat  value 
of  the  sixty-six  millions  of  people  which  free  coinage  will 
confiscate  is  $24,734,558  annually.  The  fight  of  the  free 
coinage  interests  is  to  appropriate  or  confiscate  this  credit  of 
sixty-six  millions  of  people,  worth  $24,734,558  per  year  and 
worth  forty-five  cents  on  every  ounce  of  silver,  by  an  act  of 
Congress,  and  add  it  to  the  commercial  bullion  value  of  silver 
and  make  the  silver  owners  possessors  of  both.     When  and 


15 

where  in  the  history  of  the  race  has  such  a  transaction 
received  the  approbation  of  study,  reason,  and  justice? 

But  the  free  coinage  men  claim  that  in  return  they  give 
an  increased  volume  of  money  to  the  masses,  and  that  this 
increased  volume  of  money  increases  the  value  of  wages 
and  property.  The  fallacy  of  such  an  argument  is  in  assum- 
ing that  free  coinage  is  the  only  way  to  increase  the  volume 
of  money.  I  agree  that  we  must  have  an  increased  volume 
of  money  and  that  such  an  increa.se  of  money  is  in  the 
direct  interest  of  the  masses ;  but  the  increased  volume 
does  not  depend  on  free  coinage  of  silver  even  if  all  the  sil- 
ver should  be  so  u.sed.  But  if  the  sixty-six  millions  of  peo- 
ple buy  the  silver  output  at  its  commercial  value,  $47,288,207, 
and  then  coin  it  into  legal-tender  dollars  or  issue  legal-tender 
certificates  to  the  same  amount,  then  the  volume  of  money 
would  be  the  same  as  under  free  coinage,  and  the  sixty-six 
millions  of  people  would  save  the  credit  value  of  $24,734,558, 
annually.  If  the  people  are  to  be  benefited,  why  not  begin 
the  benefit  by  saving  them  this  credit  value  of  $24,734,558 
annually  which  inures  to  the  benefit  of  the  people  ;  but  if  this 
credit  of  $24,734,558  is  to  be  donated  annually  to  a  class  many 
of  whom  are  foreigners,  let  a  proper  committee  be  appointed 
to  see  what  class  shall  be  most  worthy  to  receive  this  royal 
pension.  Better  donate  it  annually  to  the  farmers  and  pro- 
ducers until  their  farm  mortgages  are  paid  off,  or  pay  it  to  the 
laboring  classes  with  which  to  buy  homes  for  their  tenant 
families,  or  let  the  nation  spend  it  among  the  laboring  classes 
on  public  works ;  on  our  rivers,  our  highways,  our  navies,  our 
coast  defenses,  our  public  buildings,  and  our  public  educa- 
tional and  other  institutions.  Let  us  use  it  in  making  the 
poor  less  poor,  and  not  in  making  the  rich  silver  owners 
richer.  We  may  not  blame  them  for  struggling  for  it.  but 
we  are  to  blame  if  we  give  it  to  them. 

No  free  coinage  bill  is  offered  or  asked  for  by  the  silver 
interest.  The  bill  passed  in  the  last  Senate  provided  that 
the  owners  of  silver  could  deposit  their  silver  in  the  United 
States  Mint  and  take  out  paper  money,  at  the  value  of  one 


16 

dollar  and  twenty-nine  cents  per  ounce  instead  of  eighty- 
three  cents  per  ounce,  the  certificates  redeemable  in  gold 
or  silver  coin.  During  the  year  past,  under  the  present  law, 
$49,961,184  was  paid  in  certificates  for  silver,  and  there  were 
surrendered  of  these  during  the  vSame  time  $47,745,173  for 
gold  coin  at  the  United  States  Treasury.  Under  the 
so-called  free  coinage  bill  the  United  States  Treasury  would 
have  paid  out  $76,756,817  instead  of  $49,961,184  for  the 
same  silver.  This  would  be  a  bonus  of  $29,795,633  to  the 
silver  owners  in  the  last  six  months  paid  by  the  dear 
people. 

THE   TRUE   SOLUTION,    OUR   CREDIT. 

The  true  solution  of  our  "  more  money  for  the  benefit  of  the 
people  "  question  is,  and  will  finally  be  found  to  be,  a  proper 
use  of  the  credit  power  of  the  sixty-six  millions  of  people  of 
these  United  States.  This  credit  is  as  good  as  gold  in  any 
State  in  the  Union,  or  at  any  bank  counter,  or  at  any  sheriff's 
office  or  tax  collector's  office,  or  at  any  counter,  or  transpor- 
tation office.  It  is  as  good  as  gold  in  any  foreign  nation.  Our 
credit  bonds,  which  are  the  naked  promise  of  the  sixty-six 
millions  of  people  to  pay,  are  as  good  as  gold,  for  the  owners 
of  gold  in  Europe  and  America  are  ready  at  any  moment  to 
exchange  gold  for  bonds.  Nay,  wonder  of  wonders,  with 
all  their  talk  about  the  "  great  gold  "  they  will  pay  a  pre- 
mium for  our  bonds.  Will  pay  one  hundred  and  seventeen 
dollars  in  gold  for  a  one  hundred  dollar  United  States  bond, 
unsecured,  payable  with  a  low  rate  of  interest  fifty  years  in 
the  future. 

Think  of  it !  Of  this  wonderful  credit.  Gold  financiers, 
cautious,  nervous,  far-seeing  gold  financiers,  actually  willing 
to  take  this  chance  for  fifty  years  in  the  future  on  the  credit 
of  this  nation.  Take  United  States  bonds  without  collateral 
security  on  the  naked  promise  of  the  Government  to  pay. 
Investing  hundreds  of  millions  of  gold  on  the  fiat  promise 
to  pay  fifty  years  hence.  In  fact,  millionaires,  it  is  rumored, 
are  forming  combined  corners  to  force  the  United  States  to 

14 


17 

issue  its  fiat  bonds,  or  promises  to  pay,  so  that  they  can  get 
rid  of  their  gold  at  one  hundred  and  seventeen  dollars  to 
one  hundred  dollars  for  these  bonds.  Good  as  gold?  Yes, 
betterthangold,  is  the  credit  of  this  nation.  Why?  Because 
back  of  these  bonds,  back  of  the  fiat,  back  of  the  promises 
to  pay  are  the  honest  sixty-six  million  free,  prosperous  peo- 
ple, and  every  acre  of  land  in  the  United  States,  from  north 
to  south  and  from  east  to  west,  with  all  of  the  cities,  villages, 
farms,  workshops,  railroads,  and  improvements  thereon, 
including  all  of  our  gold  and  all  of  our  silver,  our  mines  and 
our  labor  and  our  future  produce.  No  nation  on  earth  has 
such  a  credit  record.  Our  war  bonds  and  greenbacks  issued 
in  war-times,  payable  in  coin,  which  was  honestly  and 
financially  understood  to  mean  whichever  coin  was  most 
valuable,  though  legally  payable  in  whatever  coin  was 
cheapest,  were  paid  by  this  nation  in  gold,  the  highest- 
priced  metal,  and  would  have  been  paid  in  silver  if  that 
metal  had  been  most  valuable.  We  as  a  nation  kept  finan- 
cial faith,  honor,  and  integrity  when  it  was  to  our  disad- 
vantage and  when  it  cost  us  millions  of  dollars,  and  we  have 
established  a  credit  among  nations  that  is  worth  more  mill- 
ions to  us  than  it  ever  cost,  provided  we  now  use  that  credit 
and  do  not  give  it  away.  We  have  paid  for  that  credit  in 
gold.  It  is  now  better  than  gold,  for  gold  may  fall  in  price, 
but  our  credit  will  not  fall.  Let  us  keep  it  there  and  say  to 
the  business  world  that  we  will  pay  our  credit  obligations 
in  whatever  metal  is  most  valuable,  the  credit  of  the  nation 
standingf  o-ood  for  the  commercial  difference  in  the  value 
of  the  article  used  for  money. 

Now  having  pictured  to  you  in  brief  outline  this  glorious 
world-wide  credit,  as  good  as  gold,  better  titan  gold,  let  me 
show  you  how  this  credit  can  be  imbedded  unchangeable  in 
our  system  and  used  to  repay  ten-fold,  a  hundred-fold,  every 
dollar  it  has  cost,  and  how  it  will  not  only  give  us  the  vol- 
ume of  money  we  need,  but  will  make  us  the  banking  nation 
of  the  world.  It  can  be  ruined  by  allowing  schemers  to 
cast  a  cloud  upon  it  by  creating  the  impression  that  we  will 


18 

go  back  on  our  credit,  and  pay  our  debts  or  promises  in  the 
least  valuable  of  two  or  more  metals.  Or  it  can  be  impaired 
by  allowing  schemers  or  ignorance  to  so  inflate  our  credit 
that  a  doubt  will  exist  as  to  our  ability  to  pay  all  of  our 
credit  promises,  however  good  our  intentions  may  be.  Pro- 
tect these  two  points  so  that  financiers  will  never  entertain 
a  doubt  upon  them,  and  our  credit  will  continue  as  good  or 
better  than  gold  so  long  as  the  nation  endures. 

WIlAr    IS    THIS   CREDIT   MONEY? 

It  is  the  promise  of  sixty-six  millions  of  people,  having  an 
aggregate  wealth  of  $70,00x3,000,000,  with  the  power  of  tax- 
ation to  fulfill  the  promise,  as  against  the  promise  of  a  few 
individuals  liable  on  a  check,  draft,  or  State  bank  note.  It 
is  made  by  common  consent,  in  the  form  of  law,  a  legal  ten- 
der in  satisfaction  of  debt  among  all  people  in  the  jurisdic- 
tion of  this  nation,  and  the  nation  will  give  gold  to  any 
bearer  who  may  specially  demand  it ;  but  as  the  legal-ten- 
der paper  will  perform  every  function  of  money  within  this 
nation  that  gold  will,  no  citizen,  for  dome.stic  use  or  busi- 
ness affairs,  will  care  to  have  gold.  Only  those  who  must 
pay  a  foreign  debt  will  desire  to  surrender  paper  legal  ten- 
der and  call  for  gold  or  silver.  One  thing  is  certain,  that  the 
joint  promise  of  .sixty-six  millions  of  people  on  a  legal-tender 
note  is  vastly  more  certain  to  be  fulfilled  on  demand  than 
the  promise  of  any  part  of  the  same  people  on  a  State  bank 
note  or  other  promise  to  pay.  But,  says  some  one,  if  after 
these  legal  tenders  are  issued  gold  should  be  exported,  how 
will  the  Government  get  gold  to  take  up  legal  tenders  pre- 
sented for  gold  ?  Just  as  any  man,  bank,  or  nation  would 
get  it  under  the  same  circumstances.  Buy  it.  There  is  no 
other  way.  The  nation  can  neither  make  gold  nor  steal 
it;  therefore  it  must  buy  it,  just  as  it  always  has  and 
always  must  do.  Issuing  interest-bearing  bonds  is  paying 
a  premium  for  gold.  Why  ?  Because  if  the  bond  bore  no 
interest  it  would  not  buy  gold,  but  adding  interest  makes 


19 

the  capital  invested  in  the  bond  productive,  and  it  then 
becomes  a  premium  on  gold.  It  is  just  as  well  to  buy  gold 
with  non-interest-bearing  legal  tenders  and  pay  a  premium 
as  to  pay  with  bonds  and  interest  as  a  premium.  The 
legal-tender  power  is  the  premium  paid  for  gold.  This  was 
recently  shown  when  the  Secretary  offered  New  York 
banks  bonds  as  collateral  for  gold.  The  banks  refused, 
because  the  bonds  could  not  be  used  for  money,  but  did 
exchange  gold  for  legal-tender  paper  money.  Using  legal- 
tender  paper  money  for  domestic  uses  would  free  some 
$300,000,000  of  gold,  or  more,  that  is  now  scattered  all  over 
the  United  States.  Such  a  volume  in  our  national  Treasury 
would  meet  every  demand. 

The  plan  of  buying  gold  or  silver  with  currency  and  pay- 
ing a  premium,  and  at  the  same  time  keeping  currency  on 
an  exchangeable  par  Avith  gold,  would  require  to  be  guarded 
by  allowing  the  United  vStates  Treasury  discretion  to 
■charge  a  premium  on  all  gold  or  silver  taken  from  the 
Treasury  for  export.  This  right  is  exercised  by  foreign 
nations  to  retain  their  gold  at  home.  Our  nation  should 
do  the  same.  Our  nation  should  also  retain  the  prior 
right  at  any  time  to  buy  at  its  market  value  for  full 
legal-tender  currency  any  of  the  gold  or  silver  taken  from 
the  mines  on  public  lands,  or  from  such  lands  hereafter 
-sold  or  patented.  Possibly  the  better  solution  would  be  to 
stop  the  coinage  of  gold  and  silver  and  run  the  bullion 
into  five  hundred  dollar  ingots,  buying  and  selling  them  for 
legal-tender  currency  at  their  commercial  value. 

BUYING   GOLD   AND   SILVER   FOR   MONEY. 

All  gold  and  silver  is  private  property.  The  Govern- 
ment does  not  own  them.  It  can  not  appropriate  or  con- 
fiscate them.  It  must  go  into  the  market  and  buy.  This 
purchase  can  only  be  made  by  using  the  national  credit, 
that  is,  the  joint  or  common  credit  of  our  sixty-six  million 
people.     The  Government  can  not  buy  gold  or  silver  with 


20 

gold  or  silver.  It  can  not  buy  with  merchandise  or  produce, 
for  the  Government  is  not  a  merchant  or  producer.  It  might 
make  all  or  a  part  of  the  taxes  payable  in  gold  or  silver 
coin  ;  but  this  would  force  citizens  to  pay  a  premium,  thus 
shifting  the  general  burden  of  purchasing  from  the  sixty-six 
millions  of  people  upon  a  few.  There  is  therefore  no  just 
or  honest  way  by  which  the  Government  can  buy  gold  or 
silver  except  to  issue  bonds  or  legal-tender  paper  money. 
In  other  words,  the  credit  of  the  sixty-six  millions  of  people 
is  the  only  thing  that  can  be  used  to  buy  gold  or  silver  for 
money  use.  The  premium  on  gold  or  silver  in  exchange 
for  bonds  or  legal-tender  money  is  either  the  interest  on 
the  bonds  or  the  legal-tender  function  of  the  paper  money. 

WHY  ? 

Now  if  the  credit  of  the  Government  is  as  good  as  gold 
or  silver  for  domestic  money  use,  and  can  be  exchanged  for 
gold  or  silver  by  paying  interest  for  the  use  of  them,  why 
should  it  be  exchanged  at  all  ?  Why  pay  interest  to  use  it 
as  a  legal-tender  money  when  we  can  use  currency  without 
paying  interest  —  legal-tender  money  being  equally  good 
for  domestic  use  ?  During  our  present  financial  disasters 
the  banks  readily  exchange  gold  at  par  for  legal-tender 
paper  money,  proving  it  to  be  as  good  as  gold  for  domestic 
money  use.  Why  not,  therefore,  let  the  nation  issue  this 
legal-tender  paper  money  as  good  as  gold  in  sufficient  vol- 
ume to  transact  the  business  of  this  nation,  and  free  the 
gold  from  domestic  use  and  allow  it  to  meet  the  demand 
for  international  use  ?  If  a  necessity  arises,  at  occasional 
times,  to  have  gold  for  foreign  payments,  it  can  be  had  as 
well  by  discounting  non-interest-bearing  legal  tenders  as  by 
issuing  interest-bearing  bonds.  It  is  much  more  profitable 
to  the  people  to  occasionally  discount  a  non-interest-bear- 
ing legal-tender  note  than  to  issue  an  interest-bearing 
bond ;  for  a  three  per  cent  interest-bearing  bond  repre- 
sents an  annual  premium  of  three  per  cent  for  gold,  and 


21 

if  the  gold  is  held  as  a  reserve  we  continue  to  pay  interest 
on  the  bond  and  are  losing  interest  on  the  idle  gold, 
whereas  with  non-interest-bearing  legal  tenders  we  only 
pay  a  vsmall  premium  occasionally  for  the  amount  of  gold 
or  silver  actually  needed  for  that  case.  As  a  matter  of  fact, 
generally,  we  would  not  pay  any  premium,  for  the  legal- 
tender  paper  will  perform  all  the  domestic  money  func- 
tions that  the  gold  will.  This  is  forcibly  shown  by  the 
fact  that  millions  of  gold  and  silver  annually  go  t<^  the 
United  States  mints  for  which  the  owners  prefer  to  take 
legal-tender  paper  money. 

The  enormous  cost  of  buying  gold  and  silver  with  inter- 
est-bearing bonds  is  shown  by  computing  the  interest  for  a 
century.  A  hundred  million  of  three  per  cent  bonds,  inter- 
est payable  semi-annually,  counting  interest  on  the  interest 
as  paid  in  and  reloaned,  will  double  every  twenty-four 
years.  The  account  will  so  stand  that  at  the  end  of  twenty- 
four  years  the  $ioo,ooo,cmX)  becomes  $200,000,000;  forty- 
eight  years  the  $100,000,000  becomes  $400,000,000  ;  seventy- 
two  years  the  $100,000,000  becomes  $800,000,000;  ninety-six 
years  the  $100,000,000  becomes  $1,600,000,000.  In  other 
words,  under  the  bond  system  of  buying  gold  for  money  use 
we  pay  $1,600,000,000  for  the  use  of  $100,000,000  for  ninety- 
six  years,  whereas  by  occasionally  paying  a  small  premium 
for  gold  when  required  the  cost  would  be  vastly  less  per 
■century  than  the  above. 

In  what  is  popularly  but  delusively  called  the  free  coin- 
age of  silver  a  premium  is  really  paid  by  the  people.  That 
premium  is  the  cost  of  free  coinage  and  stamping  the  legal 
tender  power  on  the  metal.  These  transactions  are  based 
on  the  common  business  rule  that  we  must  pay  in  some 
form  for  what  we  get.  We  must  exchange  value  for  value, 
unless  we  beg  or  steal.  The  gold  and  silver  bullion  is  the 
property  of  private  individuals.  The  legal-tender  function 
is  owned  by  the  people.  Neither  one  should  be  given  to 
the  other.  Each  should  sell  it  at  the  market  value.  The 
nation   should   therefore   clothe    its   dearly   bought   credit 


22 

with  a  legal-tender  money  function  in  the  form  of  a  non- 
interest-bearing  currency,  and  with  this  buy  gold  or  silver 
when  required,  at  its  market  value,  as  it  buys  lumber  or 
other  supplies,  and  then  use  it  as  it  deems  best,  either  for 
coinage,  or  resale  for  its  currency  notes,  or  for  a  reserve. 

For  domestic  purposes  we  have  no  need  for  gold  or  silver, 
except  for  subsidiary  coins.  No  one  wants  either  for  itself. 
People  only  want  them  because  they  believe  that  they  can 
get  rid  of  them  in  exchange  for  something  else.  Not  an 
individual  would  accept  gold  or  silver  if  he  were  forced  to 
keep  them  perpetually,  or  if  he  believed  that  he  could  not 
exchange  them  readily  for  other  things  for  the  value  at 
which  he  received  them,  or  use  them  to  pay  a  debt.  Here 
is  the  bedrock  trouble  with  silver  to-day.  People  do  not 
believe  that  they  can  get  rid  of  it,  or  exchange  it  for  other 
things,  and  therefore  their  unwillingness  to  receive  it.  If 
by  free  coinage  it  were  forced  on  the  people  of  the  United 
States  it  could  not  be  forced  on  the  people  of  the  foreign 
nations.  So  long  as  this  unwillingness  exists  in  the  minds 
of  men,  it  can  not  be  used  as  a  money  mechanism  of 
exchange  by  itself,  but  must  have  added  to  it  the  credit  of  the 
nation  to  make  up  any  deficiency  in  the  exchange  of  value. 
Therefore  the  credit  of  the  people,  as  good  as  gold,  stamped 
on  metal  or  paper,  backed  by  their  promise  to  mutually 
accept  it  at  par  as  a  medium  of  exchange,  is  the  essence  of 
the  transaction.  The  gold,  silver,  nickel,  or  paper  is  the 
material  body  on  which  the  exchange  value  and  power  are 
impressed,  and  the  common  contract  of  the  people  among 
themselves  to  use  it  is  the  vital  force. 

THE   people's   credit   AS    MONEY. 

How  can  we  best  use  this  credit  of  the  nation  as  money? 
It  has  been  created  by  our  having  kept  faith  with  our  cred- 
itors. We  received  of  them  the  highest-priced  money  and 
agreed  to  pay  in  coin.  It  was  implied  in  the  contract  that 
it  was  to  be  repaid  in  the  highest-priced  money,  but  we 


2;i 

could  have  paid  it  in  the  cheapest  coin.  This  temptation 
was  publicly  presented  and  powerfully  advocated.  Every 
argument  and  statistic  that  talent  and  money  could  produce 
to  make  the  temptation  succeed  were  produced  and  scat- 
tered broadcast  over  the  land.  At  first  like  a  wave  the 
thought  swept  over  the  land  that  here  was  relief  for  the 
struggling  debtor,  and  popular  applause  greeted  the  offer; 
but  there  came  to  the  honest  masses  as  second  thought, 
was  it  right,  was  it  just,  was  that  the  agreement  and  the 
equitable  understanding.  The  farmer  reasoned  that  when 
he  bought  a  plow  or  farm  implement  that  it  was  understood 
that  it  was  to  be  a  good  article.  He  knew  that  when  he 
sold  grain  or  hay  to  be  delivered  that  it  was  tmderstood  to 
be  good.  And  so  the  American  debtor  reasoned  (nit  that 
his  agreement  as  a  nation  was  to  pay  money  as  good  as  any 
other  money,  and  by  act  of  Congress  he  so  declared  his 
understanding  and  his  intention  to  pay  in  the  best  money, 
whether  it  was  gold,  silver,  or  paper.  The  temptation 
failed,  and  he  said,  "  Get  thee  behind  me,  vSatan  ;  the  king- 
doms of  the  whole  world  are  not  worth  my  honor."  We 
Americans  have  placed  honor  above  life ;  we  have  freely 
given  life  on  ten  thousand  battle-fields  for  honor  and  right ; 
and  we  will  not  exchange  honor  and  right  for  the  profit  of 
paying  our  debts  with  inferior  money,  but  faith  and  honor 
shall  be  as  unsullied  as  the  starry  banner  that  typifies  the 
nation's  honor.  The  integrity  of  this  good  faith  and 
honesty  is  our  credit  capital,  and  we  must  preserve  it  so 
that  it  will  never  be  questioned  in  the  financial  world. 

What  is  the  most  stable,  sacred,  unchangeable  form  in 
which  we  can  affirm  our  credit  pledge  that  every  dollar 
issued  by  this  nation,  whether  gold,  silver,  or  paper,  shall 
ever  be  held  of  equal  value,  and  that  this  nation  will  always 
pay  its  debts  and  obligations  in  the  best  money  ?  The  con- 
fidence of  foreign  capital  in  us  has  recently  been  shaken  by 
the  agitation  to  pay  in  inferior  money,  and  as  a  result  mill- 
ions of  American  securities  have  been  rushed  in  upon  us. 
Nothing  but  the  most  sacred  and  abiding  form  of  assurance 


24 

can  meet  the  demand  and  restore  a  confidence  that  will  be 
a  safe  foundation  for  the  use  of  our  credit. 

BY   A   CONSTITUTIONAL  AMENDMENT. 

This  is  our  best,  let  us  offer  nothing  less.  The  Constitu- 
tion of  the  United  States  is  the  highest,  safest,  and  most 
permanent  obligation  or  promise  that  the  Americans  can 
give.  It  is  not  only  a  declaration  accepted  by  Americans, 
but  by  the  nations  of  the  earth.  The  stability  of  its  decla- 
rations governs  the  laws  and  contracts  of  every  State  and 
every  man  in  the  States.  Counting  on  its  stability,  other 
nations  enact  laws  and  contracts  where  their  interests  come 
in  contact  with  ours.  We  have  no  higher  form  for  a  pledge 
of  faith  to  give,  either  at  home  or  abroad,  than  a  constitu- 
tional pledge.  The  confidence  of  this  world  in  our  constitu- 
tional guarantees  is  as  high  and  as  fixed  and  abiding  as  it 
is  in  the  stability  of  our  nation.  Therefore,  as  our  financial 
credit  rests  on  the  stability  of  our  promise  and  our  ability 
to  keep  all  of  our  money  upon  par  with  the  best  money,  we 
should  add  one  more  element  of  confidence  and  place  this 
promise  and  faith  of  the  nation  in  a  constitutional  amend- 
ment, where  it  will  abide  for  centuries  free  from  political 
legislation  or  judicial  disturbances,  where  as  a  chief  founda- 
tion-stone it  will  exist,  and  on  which  will  rest  our  financial 
credit,  and  on  which  will  be  reared  a  financial  system  that 
will  meet  the  growing  wants  of  this  nation  at  all  times. 
For  such  purposes  I  drafted  a  proposed  constitutional 
amendment  in  1 890.  It  was  introduced  in  both  Houses  of 
Congress  in  1892,  and  met  with  the  favorable  consideration 
of  many  of  our  ablest  men,  both  in  and  out  of  Congress. 
It  was  carefully  studied  by  Judge  Thomas  R.  Stockdale,  M. 
C,  chairman  of  the  vSub-Judiciary  Committee  of  the  House 
of  Representatives,  to  whom  it  was  referred.  After  an 
exhaustive  study  of  the  subject  for  some  ten  months  as  a 
specialty,  he  made  one  of  the  ablest  reports  on  the  financial 
subject   that   has   been   presented   in    Congress   since   our 


25 

nation  was  formed,  showing  the  absolute  necessity  of  an 
amendment  such  as  the  one  proposed.  The  report  was  filed 
a,nd  printed  March  3,  1893,  too  late  in  the  session  for  further 
action.  The  report  should  be  in  the  hands  of  every  Ameri- 
can and  should  be  studied  exhaustively.  Within  it  are 
embraced  the  financial  principles  that  will  permanently 
solve  our  financial  problem. 

THE    PROPOSED   AMENDMENT. 

Article  XVI.  Section  i.  A  national  circulating  medium  shall  be 
issued  to  the  amount  of  twenty  dollars  per  capita,  as  shown  by  the  census 
■of  1890,  and  by  each  succeeding  census,  for  the  proper  redemption  of  which, 
when  required,  the  resources,  the  faith,  and  the  property  of  the  nation  are 
pledged;  for  which  redemption.  Congress,  by  a  two-thirds  vote  of  each 
House,  may  provide  for  the  collection  of  Government  revenues  and  taxes  in 
gold  and  silver  coin. 

Sec.  2.  Said  currency  with  gold  and  silver  coin  of  these  United  States, 
of  present  weight  and  fineness,  the  dollar  being  the  standard  or  unit  of 
values,  and  such  currency  notes  of  the  same  form  and  effect  as  may  be 
issued  in  lieu  of  gold  and  silver  coin,  or  bullion  held  exclusively  for  exchange 
for  currency,  shall  constitute  the  only  legal-tender  money  of  these  United 
States,  and  shall  be  received  at  par  in  satisfaction  of  all  obligations  for  the 
payment  of  money  within  the  jurisdiction  of  these  United  States.  Said 
gold  and  silver  coin  and  currency  shall  be  exchangeable  at  par  value. 

Sec.  3.  Congress  shall  have  power  to  enforce  this  article  by  appropriate 
legislation,  but  shall  not  have  power  to  increase  or  decrease  said  issue  ; 
provided  that  after  the  issue  of  1900  Congress  may,  by  two-thirds  vote 
■of  each  House,  reduce  the  additional  issue  at  any  census. 

The  volume  of  credit  money  is  herein  named  at  twenty 
dollars  per  capita  in  addition  to  gold  and  silver.  Some 
think  that  it  should  be  more,  some  less.  That  is  a  matter 
that  would  be  fixed  by  Congress  after  a  full  consideration. 
The  effect  of  this  amendment  is  to  make  and  forever  keep 
■our  gold,  silver,  and  paper  dollars  at  par  with  each  other. 
The  faith,  wealth,  and  credit  of  the  nation  are  thus  per- 
manently pledged  to  pay  whatever  difference  may  exist  in 
the  bullion  or  commercial  value  of  the  article  used  for 
money.  This  is  honest  and  just.  For  when  this  nation 
issues  a  gold,  silver,  or  paper  dollar  it  is  put  in  circulation 
at  par  with  the  highest  dollar  issued,  and  the  people  receive 


26 

that  value  for  it,  and  they,  by  this  amendment,  stand  ready- 
to  make  that  value  always  good  to  the  holders  by  exchang- 
ing any  other  dollar  for  it.  Under  this  amendment  the 
Government  can  buy  such  gold  or  silver  as  it  deems  best  to 
hold  at  its  commercial  value,  and  the  difference  between 
that  commercial  value  and  the  money  value  is  for  the  benefit 
of  the  people,  and  when  the  nation  takes  up  or  redeems  its 
credit  obligations  in  gold  or  silver  it  should  be  by  return  of 
those  metals  at  their  commercial  value  at  the  date  of  ex- 
change, and  under  wise  rules  and  the  discretion  of  the 
Treasury  Department.  This  amendment  will  forever  pre- 
vent the  wild  inflation  of  our  credit  money,  which  has  been 
the  fatal  objection  to  the  currency  theories.  It  renders- 
impossible  the  financial  dangers  known  as  the  French 
Assignats,  John  Law,  Mississippi,  or  Argentine  Republic 
Cedula  schemes.  They  were  inflations  beyond  the  wealth 
of  the  promisors  to  pay. 

A  credit  issue  of  money  of  twenty  dollars  per  capita  rep- 
resents a  liability  of  less  than  two  cents  on  the  dollar  of  our 
national  wealth  of  seventy  billions  of  dollars  secured  by  a 
constitutional  amendment  which  is  practically  a  constitu- 
tional mortgage,  would  command  confidence  at  par  value  at 
home  and  abroad.  This  twenty  dollars  per  capita  would  take 
up  and  replace  all  forms  of  outstanding  currency,  giving  us  a 
uniform  issue  with  an  increase  of  about  twelve  dollars  per 
capita  above  our  present  unsecured  paper  money.  This 
would  be  in  addition  to  our  gold  and  silver  coin,  and  would 
also  be  in  addition  to  such  as  may  be  issued  for  gold  or 
silver  coin  or  bullion  held  for  general  redemption  or  ex- 
change. There  would  be  no  gold  or  silver  certificates.  All 
gold  and  silver  would  go  into  a  general  fund  for  exchange 
use  for  any  of  the  currency.  Our  money  would  thus  be  of  uni- 
form legal  effect,  and  every  dollar  held  by  any  one  would  be 
of  equal  use  and  value  with  any  other  in  any  part  of  the 
nation.  In  the  amendment  the  currency  issue,  in  addition 
to  the  gold  and  silver,  is  named  at  twenty  dollars  per  capita. 
This  is  a  suggested  sum,  and  before  passage  could  be  altered 


27 

to  any  better  amount.  My  own  judgment  is  that  twenty- 
five  or  thirty  dollars  would  be  better,  for  the  reason  that 
the  export  of  gold  might  otherwise  deplete  our  volume  and 
cramp  our  home  money  market.  However,  I  believe  that 
the  currency  issued  under  this  amendment  would  command 
such  confidence  and  be  so  efficient  in  its  work  that  it  would 
go  abroad  to  some  extent  in  place  of  gold,  and  if  our  volume 
were  sufficient  we  would  become  the  banking  nation  of  the 
world.  With  our  vast  resources  and  stable  form  of  govern- 
ment, and  each  man  owning  or  using  money  having  a 
financial  interest  in  the  stability  of  the  Government,  our 
currency  would  certainly  have  a  maximum  value  and  use. 
Under  the  third  section  of  the  amendment  the  volume  is 
increased  every  census  to  correspond  with  the  increase  of 
population.  And  if  it  were  found  by  experience  that  the 
volume  were  increasing  too  rapidly,  it  is  provided  that  Con- 
gress, by  a  two-thirds  vote  of  each  House,  may  reduce  the 
issue  for  that  census.  Such  a  discretionary  power  must 
rest  somewhere,  and  restricted  as  in  this  case  it  would  be 
very  safe. 

AS   GOOD   AS   GOLD. 

The  gold  in  a  dollar  (twenty-three  and  twenty-two  hun- 
dredths grains)  is  supposed  to  require  a  dollar's  worth  of 
labor,  on  the  average,  to  mine  it,  and  therefore  it  is  said  to 
represent  that  value.  A  currency  note,  when  printed  and 
deposited  in  the  United  States  Treasury,  like  the  gold  in 
the  min-e,  represents  no  value,  but  when  some  one  gives 
to  the  people,  the  Government,  a  dollar's  worth  of  labor 
or  material,  and  receives  a  paper  dollar,  thereafter  it  rep- 
resents a  dollar's  worth  of  labor  as  truly  as  does  twenty- 
three  and  twenty-two  hundredths  grains  of  gold  after  min- 
ing. The  only  difference  is  that  the  labor  is  put  forth  for 
the  gold  before  it  is  minted  into  money,  while  the  paper 
dollar  is  minted,  before  the  labor  is  put  forth  for  it.  Each 
represents  the  same  amount  of  labor. 


28 

SYSTEM    OF   CIRCULATION. 

How  shall  this  volume  of  money  be  put  in  circulation  ? 
My  reply  is,  that  it  does  not  need  to  be  forced  into  circula- 
tion. Whatever  amount  the  business  of  the  nation  calls  out 
will  pass  into  circulation.  Let  the  balance  remain  idle  in  the 
United  States  Treasury  as  a  reserve.  It  costs  no  interest 
while  lying  idle,  as  it  is  the  joint  credit  of  the  sixty-six  million 
people.  Secondly,  when  any  one  gives  the  Government 
labor  or  material  it  will  take  out  a  corresponding  amount 
of  currency.  Under  this  branch  let  the  Government  pay 
for  its  river,  harbor,  and  coast  defenses,  its  naval  construc- 
tions, its  public  buildings  and  improvements.  This  would 
save  taxing  the  people  millions  of  dollars  annually,  and  would 
aid  every  oppressed  mortgaged  taxpayer  to  apply  his  part 
<:»f  the  saved  tax  to  pay  off  his  mortgage.  It  would  give 
employment  to  hundreds  of  thousands  of  now  idle  laborers, 
not  only  on  Government  works,  but  in  all  private  industries 
that  have  to  furnish  material  and  machinery  to  the  Govern- 
ment and  to  those  who  produce  the  raw  material  for  the 
manufacturers,  and  finally  gives  employment  to  the  farming 
element  in  producing  food  and  clothing  for  the  vast  multi- 
tude of  laborers  above  referred  to.  The  labor  problem 
would  be  largely  solved  by  the  increase  in  the  volume  of 
money.  While  this  volume  of  money  was  being  put  in  cir- 
culation by  the  above  methods,  the  tax-paying  citizens 
would  have  immediate  relief,  and  all  laboring  classes  would 
relieve  their  now  critical  wants  by  receiving  employment. 
Of  course  the  above  expenditures  would  be  made  under  the 
best  judgment  and  discretion  of  Congress  and  the  depart- 
ments. If  so  done,  very  wise,  desirable,  and  beneficial 
results  would  be  quickly  realized.  You  will  readily  trace 
out  innumerable  benefits  to  the  whole  community  by  this 
method  of  placing  the  money  in  circulation  on  the  basis  of 
a  dollar's  worth  of  labor  or  material  for  each  currency 
dollar. 


29 

COMMERCIAL   CHANNELS. 

The  other  means  of  placing  the  newly  issued  currency  in 
circulation  is  through  business  or  commercial  channels. 
This  will  require  a  carefully  adjusted  system,  which  should 
utilize  as  many  existing  appliances  as  can  be  judiciously 
used,  and  should  have  added  such  other  appliances  as  will 
produce  the  best  results.  Of  course  this  would  have  to  be 
under  the  supervision  of  the  nation  for  general  safety,  but 
could  be  best  executed  in  detail  by  private  responsibility. 
The  object  of  the  sub-treasury  plan  to  furnish  money  to 
citizens  is  good  as  far  as  it  goes,  but  is  objectionable  in 
being  limited  to  a  few,  and  because  it  is  class  legislation. 
The  machinery  proposed  with  which  to  accomplish  the  results 
might  be  taken  advantage  of  by  unscrupulous  persons,  and 
might  result  in  as  much  damage  as  good.  A  well-adjusted 
banking  system  embracing  all  the  benefits  of  our  present 
system,  and  adding  others,  would  be  the  best  of  all ;  an  out- 
line of  which  I  will  proceed  to  give.  The  nation  alone 
should  issue  money,  and  it  alone  should  be  responsible  for 
its  redemption  and  exchange.  This  would  relieve  all  banks 
from  responsibility  for  the  circulation,  and  would  never  be 
the  occasion  of  a  run  on  the  banks.  If  the  banks  of  the 
United  States  were  to-day  operating  under  the  old  State 
bank  law,  and  each  had  in  circulation  its  own  notes  and  was 
carrying  the  double  load  of  indebtedness  to  depositors  and 
note-holders,  nothing  could  prevent  a  run  on  every  bank  in 
the  United  States  and  force  an  immediate  suspension.  This 
was  the  cause  of  the  general  suspension  of  banks  in 
1838,  1857,  1868.  In  1839  th^  bank-note  circulation  was 
$149,185,800;  the  legal-tender  money  was  $27,031,476;  the 
excess  of  bank  notes  was  $122,154,324.  The  banks  had  a 
double  debt,  one  to  note-holders  and  another  to  depositors. 
When  the  depositors  began  to  withdraw,  the  note-holders 
rushed  in,  and  the  demands  from  the  two  quickly  closed  every 
bank  in  the  United  States.  In  1857  the  deposits  in  the 
banks  were  $120,764,757;  State  bank  notes,  $83,312,269;  total 


;s() 

liability,  $204,077,026.  Specie  held  (the  only  legal  tender), 
$12,970,493.  Excess  of  liabilities,  $191,106,533.  At  the 
same  time  there  was  due  to  the  banks  on  loans  and  dis- 
counts $320,252,890,  leaving  an  excess  of  assets  over  liabili- 
ties of  $129,046,363.  Notwithstanding  their  solvency  the 
combined  run  of  depositors  and  note-holders  again  clovsed 
every  bank  in  the  nation. 

State  bank  notes  are  not  a  legal  tender,  are  not  money ; 
they  are  only  the  promissory  note  of  the  bank  payable  to 
the  bearer  without  interest  on  demand.  They  are  outstand- 
ing certificates  of  deposit.  Assets  and  securities  back  of 
them  are  liseless  in  a  panic.  Assets  and  securities  are  not 
money,  and  can  not  be  paid  either  to  note-holders  or  deposit- 
ors. State  bank  notes,  payable  to  bearer  on  demand,  in 
legal-tender  money,  by  the  bank,  cause  a  double  liability 
without  any  means  of  meeting  it,  and  will  periodically  close 
every  bank  in  the  system  using  them.  The  only  thing  that 
has  prevented  the  general  suspension  of  banks  in  the  sev- 
eral panics  since  1861  is  the  fact  that  there  were  no  bank 
notes  in  circulation  to  be  redeemed.  The  banks  had  only  to 
take  care  of  depositors.  The  weak  spot  in  all  credit  obliga- 
tions used  in  the  banking  system  as  money  is,  that  they  are 
deposited  over  and  over  again,  and  the  banks  give  the 
depositors  credit  on  their  books,  to  be  repaid  in  legal-tender 
money.  And  when  depositors  in  large  numbers  call  for 
legal-tender  money,  the  State  bank  notes  or  other  credit 
obligations  are  rejected  by  the  depositors.  Therefore  it 
may  be  laid  down  as  an  inexorable  and  infallible  law  of 
finance,  that  no  form  of  credit  obligation,  and  no  amount 
of  solvent  assets,  can  take  the  place  or  perform  the  functions 
of  legal-tender  money  in  final  payment,  and  that  the  volume 
of  legal-tender  money  must  be  sufficient  to  avoid  the  neces- 
sity of  using  too  much  personal  credit  obligation. 

The  object  lessons  of  the  present  year  should  teach 
our  people  that  assets,  however  good,  or  checks,  drafts, 
State  bank  notes,  or  any  other  credit  obligations,  can  not 
take  the  place  of  a  safe  volume  of  legal-tender  money.     The 


31 

fact  that  ninety-five  per  cent  of  our  business  was  transacted 
by  checks  and  credit  obligations,  demonstrates,  in  view  of 
the  failures  of  the  last  two  years,  that  we  must  have  more 
legal-tender  money  and  less  of  the  ninety-five  per  cent  per- 
sonal credit  checks.  The  nation,  therefore,  issuing  the  vol- 
ume of  legal-tender  money  must  have  some  safe,  practical 
method  by  which  it  can  furnish  a  circulating  medium  to  the 
banks,  holding  the  banks  in  some  way  responsible,  as  Govern- 
ment agents,  to  the  people  for  the  use  of  money.  The  sub- 
treasury  plan  has  an  imperfect  form  of  this  principle.  If  the 
large  volume  of  this  issue  lying  in  the  United  States  Treas- 
ury were  used  as  a  reserve  available  to  the  banks,  under 
safely  guaranteed  requirements,  and  upon  depositing  in  the 
United  States  Treasury  absolutely  good  securities,  charging 
the  banks  such  a  rate  of  interest  as  would  prevent  the 
undue  use  of  money,  it  would  give  flexibility  in  our  volume 
for  our  actual  use.  The  rate  of  interest  could  be  fixed  on 
an  increasing  scale  on  each  successive  amount  drawn  by  a 
bank.  This  rate  could  run  rapidly  up  from  one  per  cent  on 
the  first  $100,000  to  ten  per  cent  on  all  over  $500,000  or 
:$ 1, 000,000.  This  is  the  common  method  adopted  by  banks 
to  check  speculation  or  to  prevent  an  individual  customer 
from  borrowing  too  heavily.  It  runs  the  rate  of  interest  up 
to  a  point  where  it  does  not  pay  to  borrow  the  money.  The 
.same  principle  applied  by  the  Government  against  the 
banks  would  check  all  undue  speculations  or  use  of  money. 
When  the  banks  did  not  need  the  money  for  the  use  of 
their  customers,  they  could  return  it  to  the  United  States 
Treasury  and  stop  interest. 

WHAT   SECURITIES. 

Certaiii  bonds  of  States,  counties,  and  cities  could  be 
used  with  perfect  safety  with  some  additional  legislation. 
Restrict  their  use  to  a  class  where  the  total  bonded  indebt- 
edness did  not  exceed  five  or  ten  per  cent  of  the  averaged 
assessed  value  of  the  real  property  in  the  State,  county,  or 


32 

city  for  the  preceding-  five  years,  deducting  any  outstand- 
ing bonds.  Also  providing  that  after  the  public  issuance 
and  sale  of  the  bonds,  and  payment  therefor  to  the  State, 
county,  or  city  treasury,  that  all  contest  as  to  the  validity  of 
the  bonds  shall  be  forever  barred,  compelling  all  such  con- 
tests to  be  made  prior  to  the  public  sale  of  the  bonds. 
Provide  also  that  if  the  State,  county,  or  city  officers  did  not 
levy  and  collect  the  tax  to  meet  the  payment  of  interest 
and  principal,  that  the  Secretary  of  the  Treasury  could 
appoint  a  proper  officer,  under  proper  bonds,  to  at  once 
levy  and  collect  such  a  tax.  These  provisions  would  give  a 
bond  as  good  as  any  United  States  bond  ever  issued,  and 
one  that  never  could  be  repudiated  or  the  payment  thereof 
avoided.  Such  bonds  would  bear  a  rate  of  interest  as  low 
as  two  per  cent,  thus  saving  taxpayers  a  large  amount.  In 
such  bonds  banks  could  safely  invest  a  portion  of  their  cap- 
ital or  of  their  depositors'  money,  for  at  any  time,  by  deposit- 
ing these  bonds  with  the  United  States  Treasurer,  the  bank 
coftld  obtain  legal-tender  money  to  repay  depositors  or  to 
loan  to  customers.  I  do  not  see  how  a  safer  or  more  con- 
venient form  of  circulation  could  be  devised.  The  solvency 
and  safety  of  the  banks  in  the  system  would  appear  by  the 
following  form  of  a  statement,  using  for  illustration  the 
last  figures  of  the  Comptroller's  report: 

Bank  capital  paid  up.. $    686,573,015 

Deposits  (total) _ 2,327,081 ,452 

Surplus  and  profits 342,503,926 

Total $3,356,158,393 

Invested    in   bonds  of  States,   etc.,    deposited    with 

United  States  Treasurer  for  re-loan,  say 1,000,000,000 

Loans  on  real  estate 300,000,000 

Commercial  loans 1,500,000,000 

Bank  premises.. •      75,000,000 

Cash  on  hand 481,158,393 

Total $3,356,158,393 

This  gives  an  interest-bearing  aggregate  of  $2,800,000,000 
as  against  present  total  loans  and  discounts  of  $2,153,498,- 

15 


3:^ 

829.  It  also  gives  legal-tender  cash  on  hand,  $481,158,393, 
as  against  a  present  cash  on  hand  (;f  $313,384,824. 

To  meet  a  depositors'  run  the  present  system  gives :  Cash, 
$313,384,324;  United  vStates  certificates  and  redemption 
fund,  $22,241,543;  total,  $335,625,867  with  which  to  meet 
$2,327,081,452  of  deposits.  In  addition  to  this  there  could 
be  added  the  uncertain  amount  that  banks  call  in  on  loans, 
but  whatever  was  called  in  by  one  bank  would  have  to  be 
called  out  of  some  other  bank  and  would  not  increase  the 
above  aggregate,  neither  could  it  help  the  general  situation. 
Under  the  new  plan  the  resources  with  which  to  meet  a 
depositors'  run  would  be :  Cash,  $48 1 , 1 58,393  ;  bonds  in  United 
States  Treasury  on  which  legal  tenders  would  issue,  $1,000,- 
000,000;  total,  $1,481,158,393.  In  other  words,  there  would 
be  this  vast  sum  available  on  hand  to  meet  depositors' 
claims  of  $3,237,081,452,  instead  of  the  present  small  sum  of 
$335»625,867.  Such  a  financial  system  could  never  be 
shaken.  No  panic  could  ever  reach  it.  Runs  would  only 
affect  local  cases  of  individual  banks,  where  gross  misman- 
agement or  intentional  dishonesty  had  destroyed  its  assets. 
Such  a  system  would  obviate  the  necessity  of  banks  calling 
in  loans  to  meet  depositors'  checks,  which,  if  carried  to  any 
extent,  cramps  and  crushes  the  borrower.  The  replenish- 
ing would  be  from  the  reserve  loan  fund 'in  the  United 
States  Treasury  to  meet  the  temporary  demand,  to  be 
returned  to  the  Treasury  when  repaid  to  the  bank  by  the 
customer.  No  system  of  private  banking  can  withstand  or 
meet  the  colossal  demands  of  this  age. 

In  ordinary  times  and  for  local  cases,  the  banks  rediscount 
with  each  other  and  fully  meet  the  want,  but  when  the 
money  vshortage  is  general  all  over  the  nation  banks 
can  not  sufficiently  rediscount  with  each  other.  Here  is 
where  the  financial  army  is  doubled  up,  its  ranks  broken 
and  thrown  into  confusion,  followed  by  panic  and  disaster. 
There  is  now  no  system  of  reserve  for  this  point.  One 
must  be  provided,  ample  and  available,  to  reach  an}-  weak 
point  in  the  financial  line  promptly.      The  entire  reserve 


H4 

power  of  our  sixty-six  millions  of  people  for  every  subject  and 
emergency  is  in  the  Government,  and  should  be  used  when 
required.  Banks  generally  have  bonds  of  States,  counties, 
and  cities  that  are  not  yet  due.  These  will  be  paid,  princi- 
pal and  interest,  when  due,  but  the  bank  can  not  in  the 
emergency  wait.  Neither  will  the  depositors.  Other  banks 
would  purchase  or  rediscount  these  securities,  but  can  not 
for  want  of  funds  and  from  fear  of  running  short  on  cash. 
They  are  merchantable  securities  in  any  place  where  there 
is  idle  money.  The  reserve  or  money  power  of  sixty-six 
millions  of  people  as  represented  in  our  national  credit 
vested  in  a  national  issue  of  legal-tender  credit  money  is 
the  only  resource  we  have  in  such  an  emergency.  It  is 
ample  and  practicable  and  should  by  act  of  Congress  be  put 
in  a  position  where  it  can  be  utilized.  This  power  is  the 
joint  credit  of  sixty-six  millions  of  people.  They  own  it, 
and  when  they  need  it,  what  folly,  what  inexcusable  folly  or 
-^rime  against  society  not  to  use  it !  We  paid  a  great  price 
for  it,  and  if  never  utilized  it  is  a  total  loss. 

BANKS    SHOULD    RECIPROCATE. 

In  return  for  the  benefits  of  this  system  the  banks  should 
reciprocate,  and  aid  the  United  States  Treasury  when 
required.  Upon  the  order  of  the  Treasury,  approved  by 
the  President,  they  should  furnish  a  percentage  of  the 
gold  or  silver  held  by  them  in  exchange  for  currency  for 
public  use.  They  should  also  be  subject  to  such  other 
duties  toward  the  Government  as  can  be  best  performed  by 
them. 

OUR    MINES   OF    GOLD    AND    SILVER. 

These  also  should  reciprocate.  It  is  worthy  of  considera- 
tion whether  Congress  should  not  pass  an  act  giving  the 
Government  the  prior  right  to  buy  with  currency  any  or  all 
gold  or  silver  taken  from  mines  on  the  public  lands  or  from, 
mines  hereafter  sold  or  patented. 


85 

Why  should  other  nations  be  allowed  to  mine  and  export 
a  product  of  so  much  importance,  and  our  nation  stand  by- 
helpless  and  stupified  ?  Not  only  should  this  prior  right  to 
purchase  at  a  market  value  exist,  to  be  exercised  for  the 
public  good,  but  there  should  exist  a  discretionary  right  in 
the  executive  department  to  charge  a  tax,  or  commission, 
or  premiun,  on  gold  or  silver  taken  from  the  United  States 
Treasury  for  export.  This  right  is  exercised  by  the  Bank 
of  England  and  in  France  and  Germany.  Why  should  we 
not  place  the  same  self-protecting  power  in  the  hands  of 
our  officers  ? 

The  essential  elements  of  a  safe  monetary  system  for 
the  United  States  therefore  are :  First,  an  international 
clearing-house  system  to  lessen  the  actual  handling  of 
gold  in  settling  the  international  balances  among  mer- 
chants. Second,  the  issuing  by  the  United  vStates  of  a  suffi- 
cient volume  of  legal-tender  currency,  interchangeable  with 
gold  and  silver,  based  on  the  wealth  of  the  nation,  and 
publicly  guaranteed  by  a  constitutional  amendment,  so  as 
to  create  absolute  confidence  in  our  currency.  Third,  a 
banking  system  with  a  proper  amount  of  its  funds  invested 
in  the  bonds  of  States,  counties,  and  cities  that  could  be  de- 
posited in  the  United  States  Treasury,  on  which  money  could 
be  drawn  by  the  banks  to  make  loans  or  pay  depositors. 
Under  such  a  system  all  idle  money  from  all  parts  of  the 
United  States  would  be  by  the  banks  returned  to  the 
United  States  Treasury  to  avoid  paying  interest  thereon, 
thus  keeping  the  idle  money  in  its  full  strength  at  the 
reserve  point  ready  to  go  at  a  moment's  call  to  any  point 
in  the  whole  system. 

BANK   PROFITS. 

The  profit  to  a  bank  is  not  so  much  in  a  high  rate  of 
interest  as  it  is  in  the  volume  of  business.  Small  profit 
on  the  individual,  quick  sales,  and  a  large  business  is  the 
rule  of  success,  of  live  and  let  live,  in  banking  and  in  all 
other  business.     A  large  volume   of   money  will   prevent 


36 

more  failures  than  a  small  volume.  A  large  volume  of 
money  will  create,  develop,  and  sustain  a  larger  volume  of 
business  than  a  smaller  volume  would.  A  large  volume  of 
money  will  give  employment  to  more  laborers  than  a  small 
volume.  But  volume  will  not  prevent  failures  by  stealing 
or  bad  business  acts.  Failures  generally  occur  for  want 
of  money.  The  man  failing  seldom  has  a  drug  of  money 
at  his  command.  Values  and  securities  are  generally 
much  more  stable  in  the  pressure  of  plenty  of  money  than 
when  it  is  scarce.  Values  and  securities  advance  under 
the  influence  of  either  abundance  of  credit  or  abundance 
of  money.  But  when  the  advance  is  based  on  credit  the 
day  must  come  when  credit  must  be  liquidated  with  money, 
and  when  not  forthcoming  a  shrinkage  of  values  occurs, 
bringing  in  its  train  all  the  calamities  of  a  financial  crisis. 
Business  must  then  be  killed  off  until  it  is  within  the  com- 
pass of  the  volume  of  money,  and  then  start  to  grow  on 
credit  again,  and  again  be  killed  off.  When  the  advance 
of  values  and  securities  is  based  on  a  sufficient  volume  of 
money  they  must  remain  stable.  There  is  no  room  for 
shrinkage  except  upon  the  basis  of  non-productive  or  perish- 
able commodities,  and  this  is  common  to  all  financial  condi- 
tions. The  beneficial  effect  of  the  volume  of  money  reaches 
a  limit  when  it  causes  labor  to  produce  more  than  the  human 
race  can  consume.  But  surplus  products  can  largely  find  a 
market  in  some  part  of  this  big  world.  The  starving 
millions  of  Europe  can  eat  up  all  of  our  surplus  food.  The 
volume  of  money  gives  no  illegal  advantage  to  one  person  or 
set  of  persons  against  others  as  to  price.  A  large  volume 
of  money  would  advance  pro  rata  all  prices  and  labor. 
Thus,  where  the  farmer  got  an  advance  for  his  products  he 
would  in  turn  pay  an  advance  for  all  products  he  would 
consume,  and  so  of  all  others.  This  must  be  so.  For  if  it 
gave  the  farmer  a  perpetual  advantage  over  all  others  it 
would  only  be  a  question  of  years  until  the  farmers  would 
be  the  billionaires,  and,  in  fact,  in  time  would  own  the  whole 
world   and   all   its  contents.     A   small   volume    of  money 


I 


87 

enables  the  owners  of  it  to  charge  for  its  use  more  than 
the  averaged  profit  on  the  industries  of  the  country. 
Here  again  it  is  only  a  question  of  years  until  that  excess 
of  interest-rate  above  profit-rate  shall  eat  up  the  industry, 
close  it  up,  and  transfer  it  as  a  dead  property  to  the  money- 
owners.  This  continued,  wrecks  the  country  and  leaves  the 
money-owner  losses  that  more  than  offset  all  of  his  unjust 
excess  of  profits.  The  volume  of  money  must  be  such 
that  the  averaged  rate  of  interest  shall  be  less  than  the 
averaged  rate  of  profits  on  the  industries  of  the  people. 
On  no  other  basis  can  the  industries  of  the  people  prosper. 
This  rate  of  interest  can  only  be  attained  and  retained  by 
increasing  the  volume  of  money  to  the  proper  limit.  And 
that  limit  will  be  discovered  when  the  rate  of  interest  is 
reached  and  permanently  retained  all  over  the  nation  and 
all  over  the  world.  If  our  volume  of  money  were  trebled, 
•deposits  would  treble.  There  would  be  three  times  as  much 
money  to  loan.  At  a  ruling  rate  of  three  per  cent  three  times 
the  number  of  persons  could  borrow  with  profit  to  their 
business.  Banks,  therefore,  from  this  increased  amount  of 
loans  would  realize  per  year  the  equal  of  nine  per  cent  on 
the  present  volume  of  loans.  But  in  one  case  it  is  collected 
from  three  customers,  where  in  the  latter  it  is  collected 
from  one.  There  would  thus  arise  stability  all  along  the 
financial  line,  and  as  much  or  more  profit  to  the  banks  and 
less  losses.  If  from  the  bank  profits  since  1873  were 
deducted  all  the  losses  banks  have  sustained  by  failure  of 
customers  and  shrinkage  of  securities,  it  would  leave  a  net 
rate  of  interest  not  to  exceed  three  or  four  per  cent. 

To  show  how  the  principles  referred  to  in  this  address 
would  practically  work  out  when  embodied  in  an  act  of 
Congress,  I  have  carefully  prepared  a  bill,  taking  the  general 
act  of  Congress  of  June,  1864,  as  the  frame-work  and  mak- 
ing as  few  changes  or  additions  as  possible.  It  is  hereto 
attached  for  the  inspection  of  those  desiring  to  study  it. 
The  words  in  italics  show  the  suggested  changes  made  in 
the  present  law. 


38 

In  view  of  the  financial  emergency  that  rests  not  only 
upon  this  nation,  but  upon  all  the  nations,  I  would  suggest 
that  this  Congress  express  its  judgment  in  the  form  of  reso- 
lutions  on  the  necessity  of  Congress  acting  in  the  premises, 
and  enacting  a  law  whereby  the  gold  can  be  more  freely 
used  for  international  purposes,  and  that  for  our  domestic 
use  the  credit  of  the  nation,  declared  in  a  constitutional 
amendment  and  based  on  the  wealth  and  resources  of  the 
nation  to  a  safely  limited  extent,  should  be  used  in  the  form 
of  a  legal-tender  money.  As  soon  as  it  became  known  that 
Congress  would  take  such  action  confidence  would  be 
restored,  and  we  would  enter  upon  an  era  of  permanent 
prosperity  such  as  we  have  never  seen,  a  prosperity  that 
would  be  shared  in  by  every  other  nation. 

PROPOSED   ACT   OF   CONGRESS. 

This  bill  is  known  as  Senate  Bill  2,947,  and  House  Bill 
8,311,  Fifty-second  Congress,  first  session.  The  parts  in 
italics  show  where  this  bill  differs  from  the  currency  act  of 
June  3,  1864. 

A  Bill  TO  Provide  A  National  Circulating  Medium  and  to  Provide  for 

THE  Circulation  thereof. 

» 

Section  i.  That  there  shall  be  established  in  the  Treasury  Department 
a  separate  Bureau,  which  shall  be  charged  with  the  execution  of  this  and 
all  other  laws  that  may  be  passed  by  Congress  respecting  the  issue  and 
circulation  of  a  National  circulating  medium.  The  chief  officer  of  said 
Bureau  shall  be  denominated  the  Comptroller  of  Finance,  and  shall  be  under 
the  general  direction  of  the  Secretary  of  the  Treasury.  He  shall  be 
appointed  by  the  President  of  the  United  States,  with  the  approval  of  the 
Secretary  of  the  Treasury,  by  and  with  the  consent  of  Congress,  and  shall 
hold  his  office  for  the  term  of  ten  years  unless  sooner  removed  by  the  Presi- 
dent with  the  consent  of  Congress.  He  shall  receive  an  annual  salary  of 
eight  thousand  dollars;  he  shall  have  a  competent  deputy  appointed  by  the 
Secretary,  whose  salary  shall  be  four  thousand  dollars  per  year,  who  shall 
possess  the  power  and  perform  the  duties  of  the  Comptroller  during  a 
vacancy  in  said  office  or  during  the  absence  or  inability  of  the  Comptroller. 
The  Comptroller  shall  employ,  from  time  to  time,  the  necessary  clerks  to 
discharge  such  duties  as  he  shall  direct.  Such  clerks  shall  be  appointed 
and  classified  by  the  Secretary,  and  be  subject  to  the  direction  of  the  Secre- 


89 

tary  of  the  Treasury,  which  clerks  shall  be  classified  in  the  manner  now  pre- 
scribed by  law.  Within  fifteen  days  after  notice  of  his  appointment  he  shall 
take  and  subscribe  the  oath  of  office  prescribed  by  the  Constitution  and  the 
laws  of  the  United  States,  and  shall  give  to  the  United  States  a  bond  in  the 
penal  sum  of  one  hundred  thousand  dollars,  with  not  less  than  four  respon- 
sible sureties,  to  be  approved  by  the  Secretary  of  the  Treasury,  conditional 
for  the  faithful  discharge  of  the  duties  of  his  office.  The  Deputy  Comp- 
troller shall  also  take  oath  of  office,  and  give  a  similar  bond  in  the  sum  of 
fifty  thousand  dollars.  The  Comptroller  or  Deputy  Comptroller  shall  not, 
either  directly  or  indirectly,  be  interested  in  any  association  doing  a  banking 
business  under  this  act. 

Sec.  2.  That  the  Comptroller  of  Finance,  with  the  approval  of  the 
Secretary  of  the  Treasury,  shall  devise  a  seal,  with  suitable  inscription,  for 
his  office,  a  description  of  which,  with  the  certificate  of  approval  by  the 
Secretary  of  the  Treasury,  shall  be  filed  in  the  office  of  the  Secretary  of 
State,  with  an  impression  thereof,  which  shall  thereupon  become  the  seal  of 
office  of  the  Comptroller  of  Finance,  and  the  same  may  be  renewed  when 
necessary.  Every  document  executed  by  the  Comptroller,  in  pursuance  of 
any  authority  conferred  on  him  by  law,  and  sealed  with  his  seal  of  office, 
shall  be  received  in  evidence  in  all  places  and  courts  whatsoever;  and  all 
copies  of  papers  in  the  office  of  the  Comptroller,  certified  by  him  to  be 
correct  copies  of  the  originals  in  his  office,  shall  in  all  cases  be  evidence 
equally  and  in  like  manner  as  the  originals.  An  impression  of  such  seal 
directly  on  the  paper  shall  be  as  valid  as  if  made  on  wax  or  wafer. 

Sec.  3.  That  there  shall  be  assigned  to  the  Comptroller  of  Finance,  by 
the  Secretary  of  the  Treasury,  suitable  rooms  in  the  Treasury  Building  for 
conducting  the  business  of  the  Bureau  of  Finance,  and  shall  provide  safe 
and  secure  fire-proof  and  burglar-proof  vaults  in  which  it  shall  be  the  duty 
of  the  Comptroller  to  deposit  for  safe-keeping  all  plates  not  necessarily  in 
the  possession  of  engravers  and  printers,  and  other  valuable  things  belong- 
ing to  his  department;  and  the  Secretary  shall  from  time  to  time  furnish 
the  necessary  furniture,  stationery,  fuel,  light,  and  other  proper  conveniences 
for  the  transaction  of  said  business. 

Sec.  4.  That  the  Comptroller  of  Finance,  under  the  direction  of  the 
Secretary  of  the  Treasury,  is  hereby  authorized  and  directed  to  issue 
currency  notes  in  the  name  of  the  United  States  of  America  to  the  amount 
of  twenty  dollars  per  capita  of  the  population  of  the  census  of  iSgo,  in 
addition  to  gold  and  silver  coin.  Upon  ascertaining  each  following 
cejtsus  the  issue  shall  be  increased  to  said  tiuenty  dollars  per  capita.  In 
addition  thereto  he  shall  issue  such  additional  currency  notes  of  the 
same  form  and  effect  in  lieu  of  gold  or  silver  coin  of  the  United  States, 
or  bullion  deposited  or  held  exclusively  for  exchange  for  currency  notes 
as  may  be  provided  by  law.  In  order  to  furnish  suitable  notes  for  circula- 
tion the  Comptroller  of  Finance  is  hereby  authorized  and  required,  under 
the  direction  of  the  Secretary  of  the  Treasury,  to  cause  plates  and  dies  to 
be  engraved,  in   the  best  manner  to  guard  against  counterfeiting  and 


40 

fraudulent  alterations,  and  to  have  printed  therefrom,  on  paper  or  similar 
material  best  adapted  therefor,  and  numbered,  the  quantity  of  currency 
notes,  of  the  denominations  of  one  dollar,  two  dollars,  five  dollars,  ten 
dollars,  twenty  dollars,  fifty  dollars,  one  hundred  dollars,  and  five  hundred 
dollars,  as  may  be  required  to  supply  the  issue  herein  called  for.  The 
number  of  each  denomination  in  use  shall  be  such  that  the  needs  of  the 
people  shall  be  best  subserved  thereby.  The  notes  of  each  denominatioti 
shall  be  consecutively  numbered  in  series.  Said  notes  shall  express  on 
their  face  that  they  are  issued  by  the  Government  of  the  United  States 
of  America  as  the  circulating  medium  of  the  people  of  the  United  States. 
They  shall  have  the  written  or  engraved  signatures  of  the  Treasurer  of 
the  United  States,  and  of  the  Comptroller  of  Finance,  and  the  imprint 
of  the  seal  of  the  Treasurer,  and  shall  bear  such  other  statemeiits  and 
devices  as  the  Secretary  of  the  Treasury  shall  direct.  Said  notes,  and 
gold  and  silver  coin  of  the  United  States,  shall  be  received  at  par,  in 
satisfaction  of  all  obligations  within  the  Jurisdiction  of  the  United  States 
for  the  payment  of  money.  Said  gold  and  silver  coin  aftd  currency  shall 
be  exchangeable  at  the  face  value  thereof. 

Sec.  5.  That  the  Secretary  of  the  Treasury  with  the  approval  of  the 
President  may  from  time  to  time  make  such  rules  and  regulations  for 
the  exchange  of  gold,  silver,  and  currency,  at  the  Treasury  or  any  sub- 
treasury  of  the  United  States,  in  sums  of  not  less  than  five  hundred 
dollars,  as  the  interests  of  the  people  may  require.  Such  rules  and 
regulations  may  require  a  premium  to  be  paid  on  gold  or  silver  taken 
from  the  Treasury  or  sub-treasurie s ,  for  export;  said  rules  and  regula- 
tions may  also  at  any  time  require  that  the  gold  or  silver  or  any  part 
thereof  taken  from  the  public  lands  of  the  United  States,  or  from  any 
lands  hereafter  sold  or  patented  by  the  United  States,  shall  be  sold  to 
the  United  States  at  its  market  value;  and  there  is  hereby  reserved  to 
the  Government  the  prior  right  to  buy  all  or  any  part  of  such  gold  or 
silver  for  public  use  at  its  market  value,  and  shall  pay  therefor  in 
legal-tender  currency. 

Such  rules  and  regulations  may  further  provide  that  each  banking 
corporation  formed  under  the  laws  of  the  United  States,  and  receiving 
the  benefit  of  such  law,  shall  at  such  times  as  inay  be  ordered  forward 
to  the  United  States  Treasury  or  any  sub-treasury  designated,  at  the 
expense  of  the  United  States,  such  a  percentage  of  the  gold  or  silver  held 
by  such  bank  as  may  be  named  in  such  rules  and  regulations,  or  as  may 
be  designated  in  any  special  order,  and  shall  receive  in  exchange  therefor 
legal-tender  currency. 

Such  rules  and  regulations  may  also  provide  for  establishing  a  sys- 
tem for  clearing  international  commercial  balances,  under  which  the 
balances  due  between  domestic  and  foreign  clearing  houses  or  specified 
banks  may  be  deposited  to  the  credit  of  such  clearing  houses  or  banks  in 
the  United  States  Treasury.  Provided  that  all  foreign  balances  due 
the  United  States  Treasury  hereutider  shall  be  deposited  in  the  custody 
of  the  debtor  nation. 


4i 

Sec.  6.  That  it  shall  be  the  duty  of  the  Treasurer  of  the  United  States 
to  receive  worn-out  and  mutilated  circulating  notes  issued  hereunder, 
which  shall  be  destroyed  by  being  burned  to  ashes  in  the  presence  of  the 
Secretary  of  the  Treasury  and  the  Comptroller  of  Finance  or  such  other 
person  as  the  President  shall  designate.  A  permanent  book  of  record  of 
the  destruction  of  such  notes,  with  sufficient  description  thereof,  shall  be 
kept  by  the  Comptroller  of  Finance.  After  said  destruction  of  said  notes, 
new  notes  shall  be  issued  to  the  owners  of  the  destroyed  notes. 

Sec.  7.  That  for  the  purpose  of  put  ti7ig  said  notes  in  circulation  t/w 
Comptroller  of  Finance  shall  be  authorized  to  retire  all  outstanding 
notes  or  curreticy  of  the  United  States,  and  to  buy  such  legally  issued 
ionds  of  the  States,  counties,  and  incorporated  cities  of  over  five  thousand 
inhabitants  as  he  deems  proper.  Said  bonds  to  be  issued  by  said  States, 
counties,  and  cities,  for  a  valuation  not  to  exceed  five  per  cent  of  the  aver- 
age assessed  value  of  the  real  estate  in  said  State,  county,  or  city,  for  the 
five  years  preceding  the  issuance  of  said  bonds,  deducting  from  the  said 
Issue  of  bonds  the  par  value  of  any  other  outstanding  bonds  issued  by 
said  State,  county,  or  city.  Said  bonds  shall  be  a  lien  on  all  personal 
and  real  estate  in  said  State,  county,  or  city,  except  public  property,  and 
-shall  bear  interest  at  the  rate  of  two  per  cent  per  year,  and  shall  not 
run  to  exceed  twenty  years.  The  interest  shall  be  payable  annually  to 
the  Comptroller  of  Finance  at  Washington,  and  a  sinking  fund  shall  be 
provided  in  each  case  sufficient  to  liquidate  said  bonds  at  or  before 
maturity.  The  public  issuance  of  such  bonds,  their  delivery  to  the 
Comptroller  of  Finance,  and  the  receipt  of  the  circulating  notes  thereof, 
shall  be  deemed  conclusive  evidence  of  the  legal  issuance  and  validity  of 
said  bonds,  and  thereafter  no  defense  shall  be  set  tip  to  the  payment  of 
principal  or  interest,  or  to  the  levying  and  collecting  of  taxes  therefor. 
All  objections  or  defense  to  the  issue  of  said  bonds  must  be  made  by  the 
parties  interested  prior  to  the  delivery  thereof  to  the  Comptroller  of 
Finance,  otherwise  they  are  forever  waived  and  barred  as  a  defense. 
Said  bonds  may  be  sold  by  the  Comptroller,  and  such  bonds  or  any  United 
States  bonds  may  be  deposited  at  par  by  banks  with  Treasurer  as  reserve 
security,  on  which  said  banks  may  obtain  the  use  of  money  as  hereinafter 
provided. 

If  said  State,  county,  or  city  shall  fail  or  neglect  at  any  time  to  lei'y 
and  collect  a  sufficient  tax  to  meet  the  obligations  of  said  bonds,  there 
shall  be  immediately  due  and  payable  to  the  Comptroller  of  Finance  a  tax 
jon  the  real  atid  personal  property  in  said  State,  county ,  or  city  in  default, 
/>n  its  last  assessment  roll,  sufficient  to  meet  said  payments  and  costs  of 
collecting  the  same;  and  the  same  shall  be  collected  by  any  person  or 
persons  appointed  therefor  by  the  Comptroller  of  Finance,  who  shall 
have  power,  where  said  tax  is  not  paid  within  thirty  days  after  it  is 
levied,  to  collect  the  same  by  seizure  and  sale  upon  warrant  issued  by 
any  judge  ex  parte  of  any  court  of  original  jurisdiction.  State  or  national, 
/laving  jurisdiction  of  the  property.      The  United  States  may  become  the 


42 

purchaser  of  stick  property.  Redemption  may  be  made  within  one  year 
after  sale,  by  paying  the  amount  due  on  the  sale,  costs  and  interest 
thereon  at  ten  per  cent.  Provided  that  no  bonds  shall  be  purchased 
hereunder  except  such  as  by  State  laws  are  made  subject  to  the  terms  of 
this  act. 

Sec.  8.  That  associations  for  carrying  on  the  business  of  banking  may- 
be formed  by  any  number  of  persons,  not  less  in  any  case  than  five,  who 
shall  enter  into  articles  of  association,  which  shall  specify  in  general  terms 
the  proposed  name  of  the  association,  the  object  for  which  the  association  is 
formed,  and  the  proposed  capital  stock;  and  may  contain  any  other  provision, 
not  inconsistent  with  the  provisions  of  this  act,  which  the  association  may 
see  fit  to  adopt  for  the  regulation  of  the  business  of  the  association  and  the 
conduct  of  its  affairs,  which  said  articles  shall  be  signed  by  the  persons 
uniting  to  form  the  association,  and  a  copy  of  them  forwarded  to  the 
Comptroller  of  Finance,  to  be  filed  and  preserved  in  his  office.  Attached  to 
said  articles  of  association  shall  be  a  schedule  of  the  botids  offered  and 
known  as  "  the  reserve  security"  as  herein  provided  for,  which  schedule 
shall  accurately  describe  said  botids.  Upon  receipt  of  said  articles  and 
schedule,  the  Comptroller  of  Finance  shall  proceed  in  whatever  manner 
he  deems  best  to  verify  the  facts  set  out  in  said  schedule;  and  when  satis- 
fied that  the  average  assessed  value  for  said  five  years  tie.vt  preceding 
is  not  in  excess  of  the  actual  value  of  said  real  estate,  and  that  the 
schedule  is  otherwise  correct  as  to  its  statement,  he  shall  notify  said  per- 
sons of  that  fact  of  the  name  approved  by  him  for  the  association. 

Skc.  9.  That  the  persons  uniting  to  form  such  an  association  shall  make 
a  certificate  of  organization,  v.-hich  shall  specify: 

First  — The  name  assumed  by  the  association. 

Second — The  place  where  its  operations  of  discount  and  deposit  are  to  be 
carried  on,  designating  the  State,  Territory,  or  district,  and  also  the  partic- 
ular county  and  city,  town  or  village. 

Third — Its  capital  stock,  and  the  number  of  shares  into  which  it  shall 
be  divided. 

Fourth — The  name  and  places  of  residence  of  the  shareholders,  and  the 
number  of  shares  held  by  each. 

Fifth  —  An  accurate  copy  of  the  schedule  of  bonds  attached  to  the  articles 
of  association  provided  for  in  Section  8. 

Sixth  —  A  declaration  that  said  certificate  is  made  to  enable  such  persons 
to  avail  themselves  of  the  advantages  of  this  act,  and  that  said  bonds  are 
for  security  as  required  in  this  act. 

The  said  certificate  shall  be  duly  signed  and  acknowledged  by  each  of 
said  persons,  in  the  manner  required  by  the  law  of  the  place  for  acknowl- 
edging conveyances  of  real  estate,  to  entitle  them  to  be  recorded.  When 
duly  certified  therefor  said  certificate  shall  be  recorded  in  the  proper 
book  of  record  of  the  county  or  district  in  which  the  association  is  situated. 
When  duly  recorded  the  said  certificate  shall  be  transmitted  to  the  Comp- 
troller of  Finance,  who  shall  record  and  carefully  preserve  the  same  in  his 


43 

office.  Copies  of  said  certificate,  duly  certified  by  the  Comptroller  of 
Finance  and  authenticated  by  his  seal  of  office,  shall  be  legal  and  sufficient 
evidence  in  all  courts  and  places  within  the  jurisdiction  of  the  Government 
of  the  United  States  of  the  existence  of  said  association  and  of  every  other 
matter  that  could  be  proved  by  the  production  of  the  original  certificate. 

Sec.  io.  That  710  associatioji  shall  be  organized  hereunder  with  a 
''reserve  security"  greater  than  one  milliofi  dollars,  or  with  a  less 
"  reserve  security  "  tha?i  twenty-Jive  thousand  dollars,  nor  with  a  capital 
stock  of  less  tha}i  fifty  thousand  dollars. 

Sec.  II.  That  whenever  a  certificate  of  organization  has  been  received 
and  filed  by  the  Comptroller  of  Finance,  and  is  found  by  him  to  fully  com- 
ply with  the  requirements  of  this  act,  the  Comptroller  of  Finance  shall  pro- 
ceed to  investigate,  in  the  manner  deemed  best,  the  personal  standing, 
financial  condition,  and  record  of  the  persons  seeking  to  form  the  associa- 
tion, also  the  object  of  the  association,  and  any  other  facts  that  may  aid 
him  in  determining  the  desirability  of  such  an  association  and  the  probable 
safety  of  its  business  affairs  and  management.  The  Comptroller  of  Finance 
may  use  such  special  means  as  he  deems  best  to  safely  ascertain  the  facts 
above  referred  to.  When  it  shall  appear  to  the  satisfaction  of  the  Comp- 
troller of  Finance  that  the  association  is  lawfully  entitled  to  commence  the 
business  of  banking  with  safety  to  the  Government  and  to  the  people,  he 
shall  issue  to  such  association  a  certificate  under  his  hand  and  official  seal 
that  such  association  has  complied  with  all  the  provisions  of  this  act ' 
required  to  be  complied  with,  and  that  such  association  is'  author- ' 
ized  to  commence  the  business  of  banking,  designating  the  place  of  busi- 
ness, fully  naming  the  directors  and  officers  thereof  for  the  first  year,  and  its 
capital  stock  and  character  and  amount  of  reserve  security.  The  said 
certificate  shall  be  published  in  such  local  newspapers,  for  si.xty  days,  as  the 
Comptroller  of  Finance  shall  designate.  From  the  date  of  said  certificate 
said  association  shall  be  deemed  a  body  corporate  to  transact  the  business 
of  banking  hereunder,  with  the  usual  rights,  powers,  and  duties  of  banking 
corporations,  and  shall  exist  for  a  period  of  twenty  years  from  such  date. 
An  impress  of  its  corporate  seal  shall  be  filed  with  the  Comptroller  of 
Finance  and  with  the  Secretary  of  the  Treasur3\ 

Sec.  12.  That  thereafter,  upon  the  demand  of  said  association,  the 
Comptroller  of  Finance  shall  issue  io  said  association  a  luarrant  on  the 
Treasury  of  the  United  States,  for  circulating  notes  of  the  Government 
to  the  amount  of  ninety-five  per  cent  of  the  par  value  of  said  bonds  depos- 
ited by  said  ba?ik,  or  for  atiy  part  thereof,  as  demanded  from  time  to  time, 
which  warrants,  upon  presetitment  duly  indorsed,  shall  be  paid  out  of 
the  Treasury  in  the  notes  issued  hereunder.  Said  sum  or  any  part  thereof , 
not  less  than  five  thousand  dollars,  may,  at  any  time,  be  returned  to  the 
Treasury. 

Sec.  13.  That  the  affairs  of  all  associations  for  banking  purposes  formed, 
hereunder  shall  be  managed  by  its  board  of  directors  which  maybe  in  legal 
session  on  any  Monday  from  10  A.  M.  wherein  a  quorum  is  present,  and  oa 


44 

any  other  day  where,  after  notice,  a  quorum  maybe  present  or  to  which  a 
regular  session  may  be  adjourned,  a  quorum  being  present. 

Every  director  shall  be  a  citizen  of  the  United  States  during  his  whole 
term  of  service;  and  at  least  three-fourths  of  the  directors  shall  have  resided 
in  the  State  or  Territory  or  district  in  which  such  association  is  located  one 
3'ear  next  preceding  their  election  or  appointment  as  directors,  and  shall 
be  residents  thereof  during  their  term  of  office.  Each  director  shall  own 
in  his  own  right  at  least  ten  shares  of  the  capital  stock  of  the  association. 
Each  director,  when  elected  or  appointed,  shall  take  an  oath  that  he  will,  so 
far  as  the  duty  devolves  upon  him,  diligently  and  honestly  administer  the 
affairs  of  such  association,  and  will  not  knowingly  violate,  or  willingly 
permit  to  be  violated,  any  of  the  provisions  of  this  act,  and  that  he  is  the 
bona-fide  owner  in  his  own  right  of  ten  shares  of  the  capital  stock  of  the 
association,  standing  in  his  own  name  on  the  books  of  the  association, 
and  that  the  same  is  not  hypothecated  or  in  any  way  pledged  as  security 
for  any  loan,  debt,  or  obligation  ;  which  oath,  subscribed  by  him  and  duly 
certified  as  required  by  law,  shall  be  immediately  transmitted  to  the  Comp- 
troller of  Finance  and  by  him  filed  and  preserved  in  his  office. 

Sec.  14.  That  the  directors  of  any  association  first  appointed  shall  hold 
office  until  their  successors  shall  be  elected  and  qualified.  All  elections 
shall  be  held  on  the  second  Tuesday  of  January  of  each  year,  and  the 
directors  as  elected  shall  hold  their  places  until  their  successors  are  elected 
and  qualified.  Any  vacancy  occurring  by  reason  of  a  director  ceasing  to 
own  the  required  amount  of  stock,  or  from  any  other  cause,  shall  be  filled 
by  appointment  by  the  board.  If  from  any  cause  an  election  shall  not  be 
held  at  the  time  designated,  it  may  be  held  on  any  subsequent  day  by  pub- 
lishing thirty  days'  notice  thereof  in  a  local  daily  paper. 

Sec.  15.  That  in  all  meetings  of  the  stockholders  each  share  of  stock 
shall  be  entitled  to  one  vote  on  all  questions.  Shareholders  may  vote  by 
proxies,  duly  authorized  in  writing.  None  but  shareholders  can  use  or  hold 
a  proxy. 

Sec.  16.  That  the  shares  of  stock  may  be  transferred  on  the  books  of  the 
association  in  such  manner  as  may  be  prescribed  in  the  by-laws  of  the  asso- 
ciation. No  transfer  shall  be  made  of  stock  where  the  holder  is  indebted  to 
the  association  in  any  manner  ;  but  the  association  has  a  lien  on  all  of  its 
stock  for  such  indebtedness.  Every  person  becoming  a  shareholder,  by 
transfer  or  otherwise,  shall,  in  proportion  to  his  shares,  succeed  to  all  the 
rights  and  liabilities  of  the  prior  holder  of  such  shares,  and  no  change  shall 
be  made  in  the  articles  of  association  by  which  the  rights,  remedies,  and 
securities  of  the  existing  creditors  of  the  association  shall  be  impaired. 
The  shareholders  of  each  association  formed  under  the  provisions  of  this 
act,  and  of  each  existing  bank  or  banking  association  that  may  accept  the  pro- 
visions of  this  act,  shall  be  held  individually  responsible,  equally  and  ratably, 
and  not  one  for  the  other,  for  all  contracts,  debts,  and  engagements  of  such 
associations  to  the  extent  of  the  amount  of  their  stock  therein,  at  par  thereof, 
in  addition  to  the  amount  invested  in  such  shares. 


4r) 

Sf.c.  17.  That  the  capital  stock  or  the  reserve  security  of  any  association 
formed  hereunder  may  be  increased  or  decreased  within  the  limits  fixed  for 
the  capital  stock  or  the  reseri'e  security  by  this  act  by  a  two-thirds  vote  of 
its  shareholders  at  any  annual  meeting  in  January.  The  increase  or 
decrease  of  capital  stock  or  t/ie  reserve  security  shall  be  made  by  comply- 
ing with  the  requirements  of  this  act  as  to  the  formation  of  such  associations 
in  the  first  instance,  and  by  complying  with  such  additional  requirements 
as  the  Comptroller  of  Finance  may  deem  best  to  secure  the  interests  of  all 
parties  concerned,  provided  that  in  the  decrease  of  the  reserve  security 
the  association  so  decreasing  its  reserve  security  shall  surrender  to  the 
Comptroller  of  Finance  circulating  notes  received  thereon  to  the  amoxttit 
of  the  decrease.  In  such  cases  the  Comptroller  of  Finance  may,  in  his 
discretion,  release  from  the  effect  of  this  act  a  pro  rata  of  the  bonds 
described  in  the  certificate  of  organization,  but  this  shall  only  be  done  in 
cases  where  the  Comptroller  of  Finance  shall  find  the  association  to  be 
solvent.  The  maximum  or  niinimum  of  such  ijtcrease  or  decrease  shall 
be  determined  by  the  Comptroller  of  Finance. 

Any  association  organized  hereunder  may  close  up  its  business  and  dis- 
solve its  organization  by  a  vote  of  its  stockholders  had  at  the  annual  meet- 
ing in  January.  In  such  cases  the  association  must  first  settle  all  of  its 
outstanding  obligations  and  return  to  the  Comptroller  of  Finance  the 
amount  of  circulating  notes  received  on  its  reserve  security.  The  Comp- 
troller of  Finance,  upon  receipt  of  a  statement  of  the  foregoing  facts  dulj- 
authenticated  by  the  directors  of  said  association  under  oath,  shall  fully 
investigate  the  matters  pertaining  thereto;  and  upon  being  satisfied  that  all 
obligations  of  said  association  are  fully  satisfied  and  discharged,  shall  cause 
said  statement  to  be  published  for  at  least  sixty  days  in  a  local  newspaper, 
and  shall  also  cause  a  notice  thereof  to  be  inserted  in  the  United  States 
Bulletin  of  Finance  for  the  same  period.  If  any  objections  to  the  dissolu- 
tion are  filed  with  the  Comptroller  of  Finance  before  the  expiration  of  said 
sixty  days,  he  shall  determine  and  adjust  any  matters  therein  objected  to  ; 
when  so  adjusted,  or  if  no  objections  are  filed  with  him,  he  shall  issue  a 
certificate  dissolving  said  association  and  releasing  the  bonds  held  under 
the  certificate  of  organization  from  any  further  claim  or  demand  thereon. 
Said  certificate  of  dissolution  shall  be  by  him  duly  signed  and  acknowledged 
so  as  to  entitle  the  same  to  record  in  the  office  where  the  certificate  of 
organization  was  recorded.  The  Comptroller  of  Finance  shall  duly  record 
said  certificate  of  dissolution  in  his  oflfice,  and  thereafter  shall  transmit  the 
same  to  said  association  upon  the  same  being  duly  recorded  in  the  oflfice 
where  the  certificate  of  organization  was  recorded.  The  association  will 
thereby  be  completely  dissolved. 

Sec.  18.  Should  the  Comptroller  of  Finance  at  any  time  deem  the  aflfairs 
of  said  association  unsafe  from  any  cause,  he  may  appoint  a  special  agent 
or  agents  under,  his  hand  and  seal  of  office,  who  shall  have  power  to  inspect 
all  aflfairs  of  said  association,  and  to  close  up  its  affairs  to  the  best  possible 
advantage  to  all  parties  interested.     To  this  end  such  agent  shall  have 


4(5 

power  to  bring  or  defend  any  suit  in  the  name  of  the  association,  and  to 
sell  at  public  or  private  sale  any  or  all  of  the  property  of  the  association, 
and  to  execute  proper  conveyances  thereof,  and  use  the  proceeds  to  close  up 
the  affairs  of  the  association.  He  shall  also  have  power  to  collect  from  the 
stockholders  the  amount  for  which  they  are  responsible  under  this  act,  and 
to  use  the  same  to  close  up  the  accounts.  He  shall  perform  such  other 
duties  as  may  be  necessary,  and  shall  give  such  bonds  for  faithful  perform- 
ance of  his  duties  hereunder  as  the  Comptroller  of  Finance  may  require. 
His  certificate  of  appointment  shall  be  duly  acknowledged  and  recorded  as 
the  other  certificates  are  required  to  be.  The  Government  shall  be  a  pre- 
ferred creditor  in  all  such  cases  as  are  provided  for  in  this  section. 

Sec.  19.  That  the  directors  may  declare  dividends  from  the  net  profits 
of  the  association,  but  such  association  before  it  shall  declare  a  dividend 
shall  carry  at  least  ten  per  cent  of  its  net  profits  to  a  surplus  fund  until  said 
reserve  fund  shall  equal  the  capital  stock  of  said  association. 

Sec.  20.  That  it  shall  be  lawful  for  any  association  hereunder  to  pur- 
chase, hold,  and  convey  real  estate  as  follows: 

First  —  Such  as  shall  be  necessary  for  its  immediate  accommodation  in 
the  transaction  of  its  business. 

Secottd —  Such  as  shall  be  mortgaged  to  it  in  good  faith  by  way  of  security 
for  debts  previously  contracted  ox  for  loans  made  thereon. 

Third  —  Such  as  shall  be  conveyed  to  it  in  satisfaction  of  debts  previously 
incurred  in  the  course  of  its  dealings. 

Fourth  —  Such  as  it  shall  purchase  at  sales  under  judgments,  decrees,  or 
mortgages  held  by  the  association,  or  shall  purchase  to  secure  debts  due  to 
said  association. 

Such  association  shall  not  purchase  or  hold  real  estate  for  any  other  pur- 
pose than  as  herein  specified.  Provided,  that  all  such  real  estate  acquired 
other  than  for  the  purpose  of  the  business  of  the  association  shall  be  sold 
within  five  years  after  it  is  obtained  by  the  association. 

Sec.  21.  That  each  association  may  charge  such  rates  of  interest  as  may 
be  allowed  by  local  laws  where  the  association  is  situated.  Each  association 
shall  keep  on  hand  in  cash  an  amount  equal  to  at  least  twenty-five  per  cent 
of  the  amount  of  its  deposits.  When  the  reserve  amount  shall  fall  below 
said  percentage,  no  more  dividends  or  loans  shall  be  made  until  the 
amounts  called  in  shall  restore  the  said  percentage. 

Sec.  22.  That  every  association  hereunder  shall  make  to  the  Comptroller 
of  Finance  a  report,  according  to  the  form  which  may  be  prescribed  by  him, 
verified  by  the  oath  or  affirmation  of  the  president  or  cashier  of  such  associa- 
tion, which  report  shall,  among  other  things,  exhibit  in  detail,  and  under 
appropriate  heads,  the  resources  and  liabilities  of  the  association,  and  the 
last  assessment  valuation  of  its  real  estate,  before  the  commencement  of 
business  on  the  morning  of  the  first  Monday  of  the  months  of  January, 
April,  July,  and  October  of  each  year,  and  at  such  other  times  as  the 
Comptroller  may  order,  and  shall  transmit  the  same  to  the  Comptroller  of 
Finance  within  five  days  thereafter.     And  any  bank  failing  to  transmit  such 


47 

report  shall  be  subject  to  a  penalty  of  one  thousand  dollars  for  each  day 
after  said  five  days  that  said  report  is  delayed  beyond  that  time.  The 
Comptroller  shall  cause  abstracts  of  said  reports  to  be  published  in  the 
United  States  Ihilletin  of  Finance,  and  the  separate  report  of  each  associa- 
tion shall  be  published  by  the  association  in  a.  local  daily  newspaper  for  at 
least  one  week.  Said  association  shall  forward  with  each  quarterly 
report  one-half  {)4)  of  one  per  cent  of  the  cash  used  on  its  reserve 
security  during  the  preceding  quarter,  as  interest  thereon,  on  sums  not 
to  exceed  one  hundred  thousand  dollars,  and  three  fourths  of  one  per 
ce7it  per  quarter  on  sums  in  excess  of  one  hutidrcd  thousand  dollars  and 
less  thaft  two  hundred  thousand  dollars;  thereafter  the  rate  shall 
increase  one  per  cent  per  quarter  additional  on  each  additional  one  hun^ 
dred  thou satid dollars  used,  or  on  any  part  thereof ;  and  in  case  of  default 
in  the  payment  thereof,  by  any  association,  said  interest  may  be  collected 
in  the  manner  provided  for  the  collection  of  United  States  duties  of  other 
corporations.  In  addition  to  the  quarterly  reports  required  herein,  every 
association  shall,  on  the  first  Tuesday  of  each  month,  make  to  the  Comp- 
troller of  Finance  a  statement,  under  oath  of  the  president  or  the  cashier, 
showing  the  condition  of  the  association  making  such  statement,  in  respect 
to  the  average  amount  of  loans  and  discounts,  specie  and  circulating  notes 
on  hand  belonging  to  the  association,  clearing-house  certificates,  deposits, 
and  such  other  matters  as  the  Comptroller  of  Finance  may  require. 

Sec.  23.  That  no  association  shall  make  loans  or  discounts  on  the  security 
of  the  shares  of  its  own  capital  stock,  nor  be  the  purchaser  or  holder  of  any 
sucli  shares,  unless  such  security  or  purchase  shall  be  necessary  to  prevent 
loss  upon  a  debt  previously  contracted  in  good  faith;  and  stock  so  pur- 
chased or  acquired  shall  be  sold  within  six  months  from  the  time  of  its  pur- 
chase. But  no  such  purchase  or  sale  shall  relieve  the  former  owner  thereof 
from  his  pro  rata  of  responsibility  for  all  debts  incurred  by  the  association 
prior  to  sale  and  transfer  to  a  new  purchaser  in  good  faith. 

Sec.  24.  That  no  as.sociation,  or  any  member  thereof,  shall,  during  the 
time  it  shall  continue  its  banking  operations,  withdraw,  or  permit  to  be 
withdrawn,  either  in  the  form  of  dividends  or  otherwise,  any  portion  of  its 
capital  or  surplus  fund.  And  if  any  losses  shall  at  any  time  have  been  sus- 
tained by  any  such  association,  equal  to  or  exceeding  its  undivided  profits 
then  on  hand  in  cash,  no  dividend  shall  be  made;  and  no  dividend  shall 
ever  be  made  by  any  association,  while  it  shall  continue  its  banking  opera- 
tions, to  an  amount  greater  than  its  net  profits  then  on  hand,  deducting 
therefrom  its  losses  and  bad  debts  and  ten  per  cent  for  the  reserve  fund. 
And  all  debts  due  any  association  on  which  the  interest  is  past  due 
and  unpaid  for  a  period  of  six  months,  unless  the  same  shall  be  well  secured 
and  shall  be  in  process  of  collection,  shall  be  considered  bad  debts  within 
the  meaning  of  this  act. 

Sec.  25.  That  the  president  and  cashier  of  every  such  association  shall 
cause  to  be  kept  at  all  times  a  full  and  correct  list  of  the  names  and  resi- 
dences of  all  the  shareholders  in  the  association,  and  the  number  of  shares 


48 

held  by  each,  in  the  office  where  its  business  is  transacted;  and  such  list 
shall  be  subject  to  public  inspection  during  business  hours  of  each  day  in 
which  business  may  be  legally  transacted.  A  copy  of  said  list  shall  be  sent 
with  each  quarterly  report  to  the  Comptroller  of  Finance. 

Skc.  26.  That  the  directors  of  any  hank  incorporated  under  any 
national  or  State  law  may,  upon  the  autliorization  of  the  owners  of  two- 
thirds  the  capital  stock,  in  writing,  duly  signed  and  ackriowledged, 
ai'ail  themselves  of  the  provisions  of  this  act  and  become  a  national  asso- 
ciation under  their  corporate  name  by  complying  with  the  provisions  of 
this  act :  the  said  directors  being  by  said  vote  authorized  to  execute  all 
paper>.  relating  thereto.  Any  matters  not  herein  provided  for  in  such  cases 
shall  be  adjusted  by  the  Comptroller  of  Finance  in  accordance  with  the 
spirit  and  intention  of  this  act. 

Skc.  27.  That  all  associations  under  this  act,  when  designated  for  that 
purjxise  by  the  Secretary  of  the  Treasury,  shall  be  depositaries  of  public 
money,  except  receipts  from  customs,  under  such  regulations  as  may  be 
prescribed  by  the  Secretary;  and  they  may  also  be  employed  as  financial 
agents  of  the  Government;  and  they  shall  perform  all  such  reasonable 
duties,  as  depositaries  of  public  moneys  and  financial  agents  of  the  Govern- 
ment, as  may  be  required  of  them.  And  the  Secretary  of  the  Treasury- 
shall  require  of  the  association  thus  designated  satisfactory  security  for  the 
safe-keeping  and  prompt  payment  of  public  funds  deposited  with  them,  and 
for  the  faithful  performance  of  their  duties  as  financial  agents  of  the 
Government. 

Sec.  2S.  That  all  transfers  of  the  assets,  or  any  part  thereof,  of  any 
association  doing  business  hereunder,  made  after  the  commission  of  an  act 
of  insolvency,  or  in  contemplation  thereof,  with  a  view  to  prevent  the  appli- 
cation of  it  as  assets  in  the  manner  prescribed  in  this  act.  or  with  a  view  to 
the  preference  of  one  creditor  to  another,  shall  be  utterly  null  and  void. 

Sec.  29.  That  any  director,  officer,  or  employe  of  any  association  organ- 
ized hereunder  who  shall  knowingly  violate,  or  permit  any  of  such  persons 
to  violate,  the  provisions  of  this  act,  shall  be  removed  forthwith  from  his. 
position,  by  the  proper  authority  of  the  association,  or  by  order  of  the 
Comptroller  of  Finance.  And  any  director,  officer,  or  employ^;  of  such 
association  whf)  shall  so  transact  the  business  of  such  association,  or  any 
part  of  it,  as  to  intentionally  defraud  the  association  or  any  one  else,  or 
with  the  intention  to  deceive  or  mislead  any  officer  of  the  association,  or 
any  agent  appointed  to  examine  the  affairs  of  such  association,  shall  be 
deemed  guilty  of  a  misdemeanor,  and  upon  conviction  thereof  shall  be 
punished  by  imprisonment  for  not  more  than  ten  years. 

Sec.  30.  That  all  suits  and  proceedings  arising  out  of  the  provisions  of 
this  act,  in  which  the  United  States  or  its  agents  or  officers  shall  be  parties, 
shall  be  conducted  by  the  district  attorneys  of  the  several  districts,  under 
the  direction  and  supervision  of  the  Solicitor  of  the  Treasury.  And  that 
all  suits  or  actions  arising  under  the  provisions  of  this  act  may  be  had  in 
any  circuit,  district,  or  territorial  court  of  the  United  States  held  within  the 
16 


4y 

district  in  which  the  association  may  be  established,  or  in  any  State, 
county,  or  municipal  court,  in  the  jurisdiction  of  which  said  association  is 
established,  which  has  jurisdiction  in  similar  case. 

Sec.  31.  That  if  any  person  shall  falsely  make,  forge,  or  counterfeit,  or 
cause  or  procure  to  be  made,  forged,  or  counterfeited,  or  willingly  aids  or 
assists  in  forging  or  counterfeiting,  any  note  in  imitation  of,  or  purporting 
to  be  in  imitation  of  the  circulating  notes  issued  under  the  provision  of  this 
act,  or  shall  pass,  utter  or  publish,  or  attempt  to  pass,  utter  or  publish,  any 
false,  forged  or  counterfeited  note  purporting  to  be  issued  under  the  provis- 
ions of  this  act,  knowing  the  same  to  be  fasely  made,  forged  or  counterfeited, 
or  shall  falsely  alter,  or  cause  or  procure  to  be  falsely  altered,  or  will- 
ingly aids  or  assists  in  falsely  altering,  any  such  circulating  notes  issued 
under  the  provisions  of  this  act,  or  shall  pass,  utter,  or  publish,  or  attempt 
to  pass,  utter,  or  publish  as  true  any  falsely  altered  or  spurious  circulating 
notes  issued,  or  purporting  to  have  been  issued,  under  the  provisions  of  this 
act,  knowing  the  same  to  be  falsely  altered  or  spurious,  every  such  person 
shall  be  deemed  and  adjuged  guilty  of  a  felony,  and  being  thereof  convicted 
shall  be  sentenced  to  be  imprisoned  and  kept  at  hard  labor  for  a  period  of 
not  less  than  five  years  or  more  than  twenty  years,  and  fined  in  a  sum  not 
exceeding  one  thousand  dollars. 

Sec.  32.  That  if  any  person  shall  make  or  engrave,  or  cause  or  procure 
to  be  made  or  engraved,  or  shall  have  in  his  custody  or  possession  any  plate, 
die,  or  block  after  the  similitude  of  any  plate,  die,  or  block  from  which  any 
circulating  notes  issued  as  aforesaid  shall  have  been  prepared  or  printed, 
with  intent  to  use  such  plate,  die,  or  block,  or  cause  or  suffer  the  same  to  be 
used,  in  forging  (jr  counterfeiting  any  of  the  notes  issued  as  aforesaid,  or 
shall  have  in  his  custody  or  possession  any  blank  note  or  notes  engraved 
and  printed  after  the  similitude  of  any  notes  issued  as  aforesaid  with  intent 
to  use  such  blanks,  or  cause  or  suffer  the  same  to  be  used,  in  forging  or 
counterfeiting  any  of  the  notes  issued  as  aforesaid,  or  shall  have  in  his  cus- 
tody or  possession  any  paper  adapted  to  the  making  of  such  notes,  and 
similar  to  the  paper  upon  which  any  such  notes  shall  have  been  issued, 
with  intent  to  use  such  paper,  or  cause  or  suffer  the  same  to  be  used,  in  forg- 
ing or  counterfeiting  any  of  the  notes  issued  as  aforesaid,  every  such  person, 
being  thereof  convicted  by  due  course  of  law,  shall  be  sentenced  to  be 
imprisoned  and  kept  at  hard  labor  for  a  term  not  less  than  five  or  more 
than  twenty  years,  and  fined  in  a  sum  not  exceeding  one  thousand  dollars. 

Sec.  33.  That  the  Comptroller  of  Finance  shall  cause  to  be  prepared 
each  month  concise  information  showing  the  amount  of  circulating  notes 
issued  during  the  preceding  month  and  the  approximate  amount  of  cir- 
culating notes,  gold  and  sih'er  coin  reported  in  the  banks  in  each  State, 
Territory,  District,  and  in  the  principal  cities  of  the  L'nited  States,  and 
also  the  amount  in  the  various  vaults  or  Treasuries  of  the  L'nited  States. 
It  shall  also  contain  the  name  of  each  bank,  the  amount  of  its  capital 
stock,  its  reserve  fund,  and  its  losses  for  the  preceding  month,  and  such 
other  information  as  shall  be  deemed  of  sufficient  value  to  the  financial 


50 

interest  of  the  people  to  be  published.  Such  information  shall  be  pub- 
lished monthly  by  the  Department  of  Printing  i>i  pamphlet  form,  of  con- 
venient sise  for  permanent  binding  in  book  form.  One  copy  of  each  issue 
shall  be  sent  monthly  to  each  of  the  following  parties:  To  each  associa- 
tion doing  business  hereunder;  to  the  President  and  each  member  of  his 
Cabinet,  to  each  member  of  Congress,  and  to  such  other  officers  of  the 
Government  as  the  Comptroller  of  Finance  may  direct.  Also  to  the 
Governor  of  each  State,  Territory,  or  District,  and  to  each  public  library, 
university,  or  college  applying  therefor.  Any  person  may  have  a  copy 
forwarded  to  his  address  for  one  year  by  first  forwarding  to  the  Comp- 
troller of  Finance  the  sum  of  one  dollar. 

Sec.  34.  That  as  the  currency  notes  shall  accumulate  in  the  Treasury 
of  the  Government, from  revenue  or  otherwise,  they  shall  be  returned  to 
circulation  among  the  people,  in  addition  to  the  ways  hereinbefore  speci- 
fied, by  paying  the  current  expenses  of  the  Government ;  by  the  purciiase 
of  suitable  grounds  and  the  erection  of  suitable  buildings  for  post  offices 
and  other  uses  of  the  Government;  by  the  construction  of  such  other 
works  as  shall  be  deemed  by  Congress  for  the  best  interests  of  the  public. 
The  expenditures  shall  be  made  annually,  in  each  State,  Territory,  or 
District,  as  nearly  as  may  he  in  proportion  to  the  number  of  its  inhab- 
itants. The  expenditures  hereunder  shall  be  as  directed  from  time  to 
time  by  Congress. 

Sec.  35.  That  all  notes  issued  hereunder  and  all  moneys  received  by 
the  Comptroller  of  Finance  hereunder  shall  be  deposited  in  the  Treasury  of 
the  United  States.  And  the  Comptroller  of  Finance  shall  keep  an  itemized 
account  of  the  sources  from  which  received,  with  the  dates  thereof. 

Sec.  36.  That  it  shall  be  unlawful  for  any  officer  acting  under  the  pro- 
visions of  this  act  to  countersign  or  deliver  to  any  association,  or  to  any 
other  company  or  person,  any  circulating  notes  contemplated  by  this  act, 
except  as  herein  provided,  and  in  accordance  with  the  true  intent  and  mean- 
ing of  this  act.  And  any  officer  who  shall  violate  the  provisions  of  this  sec- 
tion shall  be  deemed  guilty  of  a  high  misdemeanor,  and  on  conviction 
thereof  shall  be  punished  by  a  fine  not  exceeding  double  the  amount  so 
countersigned  and  delivered,  and  imprisoned  for  not  less  than  one  year  and 
for  not  exceeding  fifteen  years. 

Sec  37.  That  if  the  directors  of  any  association  shall  knowingly  vio- 
late, or  knowingly  permit  any  of  the  officers,  agents,  or  servants  of  the 
association  to  violate,  any  of  the  provisions  of  this  act,  all  the  rights,  privi- 
leges, and  franchises  of  the  association  derived  from  this  act  shall  be 
thereby  forfeited.  Such  violation  shall  be  first  determined  and  adjudged  by 
a  proper  circuit,  district,  or  territorial  court  of  the  United  States,  in  a  suit 
brought  for  that  purpose  in  the  name  of  the  Comptroller  of  Finance,  which 
decree  shall  adjudge  the  association  dissolved.  Thereupon  the  affairs  of  the 
association  shall  be  closed  up  by  the  Comptroller  of  Finance;  and  in  case  of 
such  violation,  every  director  who  participated  in  or  assented  to  the  same 
shall  be  held  liable  in  his  personal  and  individual  capacity  for  all  damages 


I 


51 

■which  the  association,  its  shareholders,  or  any  other  person  shall  have  sus- 
tained in  consequence  of  such  violation.  Such  directors  shall  hereafter  be 
disqualified  for  the  office  of  director  in  any  association  formed  hereunder; 
and  any  president,  director,  cashier,  teller,  clerk,  or  agent  of  any  association 
who  shall  embezzle,  abstract,  or  willfully  misapply  any  of  the  moneys, 
funds,  or  credits  of  the  association,  or  shall,  without  authority  from  the 
directors,  issue  or  put  forth  any  certificate  of  deposit,  draw  any  order  or 
bill  of  exchange,  make  any  acceptance,  assign  any  note,  bond,  or  draft, 
bill  of  exchange,  mortgage,  judgment,  or  decree,  or  shall  make  any  false 
■entry  in  any  book,  report,  or  statement  of  the  association,  with  intent  in 
■either  case  to  injure  or  defraud  the  association,  or  any  other  company,  body 
politic  or  corporate,  or  any  individual  person,  or  to  deceive  any  officer  of 
the  association,  or  any  agent  appointed  to  examine  the  affairs  of  any  such 
association,  shall  be  deemed  guilty  of  a  misdemeanor,  and  upon  conviction 
thereof  shall  be  punished  by  imprisonment  not  less  than  one  and  not  more 
than  ten  years. 

Sec.  38.  That  the  Comptroller  of  Finance,  with  the  approbation  of  the 
Secretary  of  the  Treasury,  as  often  as  it  shall  be  deemed  necessary  or  proper, 
shall  appoint  a  suitable  person  or  persons  to  make  an  examination  of  the 
affairs  of  every  banking  association  formed  hereunder;  which  person  or 
persons  shall  not  be  a  director  or  other  officer  or  employ^  in  any  association 
whose  affairs  he  shall  be  appointed  to  examine,  and  who  shall  have  power 
to  make  a  thorough  examination  into  all  the  affairs  of  the  association,  and, 
in  doing  so,  to  examine  any  of  the  officers  and  agents  thereof  on  oath,  and 
shall  make  a  full  detailed  report  of  the  condition  of  the  association  to  the 
Comptroller.  And  the  association  shall  not  be  subject  to  any  other  visi- 
torial  powers  than  such  as  are  authorized  by  this  act,  except  such  as  are 
vested  in  the  several  courts  of  law  and  chancery.  And  every  person 
appointed  to  make  such  examination  shall  receive  for  his  services  at  the 
rate  of  five  dollars  for  each  day  employed  by  him  in  such  examination,  and 
two  dollars  for  each  twenty-five  miles  he  shall  necessarily  travel  in  the 
performance  of  his  duty. 

Sec.  39.  That  persons  holding  stock  as  executors,  guardians,  adminis- 
trators, or  trustees  shall  not  be  personally  subject  to  any  liabilities  as  stock- 
holders, but  the  estates  and  funds  in  their  hands  shall  be  liable  in  like 
manner  and  to  the  same  extent  as  the  testator,  intestate,  ward,  or  person 
interested  in  said  trust  funds  would  be  if  they  were  respectively  living  and 
competent  to  act  and  hold  the  stock  in  their  own  names. 

Sec.  40.  Thai  hereafter  no  national  associations  for  the  purpose  of 
banking  shall  be  for^ned  except  under  the  provisions  of  this  act,  and  all 
banking  institutions  now  under  the  provisions  of  prior  acts  of  Congress 
shall  be  allowed  to  continue  under  such  acts  until  their  proper  term  of 
existence  has  expired.  The  currency  issued  under  the  provisions  of  this 
act  shall  be  deemed  a  public  use,  and  shall  not  be  subject  to  taxation  in 
J  he  hands  of  citizens  of  the  United  States;  but  gold  or  silver  coin  or  bull- 


52 

ion  shall  be  subject  to  taxation  at  its  market  or  commercial  bullion 
7>alue. 

Sfx.  41.  T/iat  the  present  Comptroller  of  Currency  shall  hereafter 
be  known  as  the  Comptroller  of  Finance,  under  this  act,  and  under  such 
name  shall ,  7vith  the  bureau  now  established,  perform  all  duties  required 
under  the  Tarious  acts  of  Congress  relating  to  currency  or  a  circulating 
medium. 

Sf:c.  42.  That  all  acts  or  parts  of  an  act  in  conflict  with  the  provisions 
of  this  act  are  hereby  repealed,  and  Congress  may  at  any  time  amend, 
alter,  or  repeal  this  act. 

Note. — In  reference  to  this  bill  see  House  of  Representatives  document,. 
Fifty-second  Congress,  second  session.  Report  2614,  Part  2. 


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